The market has had two fears driving it recently:
1. Omicron uncertainty - will we go right back to square one with major shutdowns?
2. Fed fears - would the Fed signal faster normalisation just as growth was slowing?
Both of these fears have, if not gone fade. The Omicron variant is at least partially handled by current vaccines and the Fed have signalled that they will slow down on hikes if they need to. So that is why the lift off for the first rates may not be until May/June. Risk looks more attractive again. Yes, we are not out of the woods, but it is not as dark as it was two weeks ago if you follow the analogy.
Therefore, with the RBNZ projecting to raise interest rates to 2.6% by the end of 2023 (current levels of 0.75%) and the BoJ expected to remain on hold as always. Does this make NZDJPY look attractive again with stops underneath the last daily swing point? It is a trade I am personally taking as the recovery in the pair could be pretty fast. Also notice the huge draws in the bond yield spread between NZ10Y & JP10Y.
