The Bank of Japan (BoJ) stands alone among the world’s central banks. As central banks are looking like hiking rates the BoJ is still using yield curve control on its 10-year bond. The BoJ is signalling that it does not want to hike rates. This has resulted in significant yen weakness and that is set to stay as the BoJ said last week that they had no concern about the JPY weakness and that it was in line with the fundamentals. Note that a weak JPY is a good news for Japan’s export-driven economy as their goods are now cheaper for other countries to buy. So, with the NZDJPY gains set to continue, it is worth seeing the strong seasonals in place.

Over the last 10 years, NZDJPY has risen 80% of the time between November 01 and December 30 with an average return of +3.86%. The largest gain was in 2016 with an 8.52% rise. The largest loss was in 2011 where it registered a -3.84% loss.

Major Trade Risks: Any significant break out of COVID-19 global cases or a vaccine-resistant variant could hinder this outlook as well as any negative news for stocks generally which can result in JPY strength.