NZD/JPY

The NZD/JPY is the currency pair encompassing the New Zealand dollar of New Zealand (symbol $, code NZD), and the Japanese yen of Japan (symbol ¥, code JPY).

The pair’s rate indicates how many Japanese yen are needed in order to purchase one New Zealand dollar.

For example, when the NZD/JPY is trading at 68.50, it means 1 New Zealand dollar is equivalent to 68.5 Japanese yen.

The New Zealand dollar (NZD) is the world’s tenth most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in a moderately liquid pair.

The NZD/JPY often stays within the 2 pip to 5 pip spread range on most forex brokers, with a volatility usually ranging between 60 and 140 pips.

The problem in trading this pair for a lot of new traders is its apparent haphazard nature, and reluctance to adhere to forex indicators.

For this reason, the NZD/JPY is a rather difficult pair to trade.

How to Trade the NZD/JPY

The JPY is a historically low-yielding currency, making it an attractive currency to fund carry trades.

Oftentimes traders borrow cheaply in JPY to buy higher-yielding currencies, including NZD.

Most FX traders tend to favor carry trades during times of optimism when regarding global economic performance and stability.

The inverse is true during times of recession, turmoil, or market stress. Consequently, the NZD/JPY is sensitive to swings in broad-based market sentiment trends.

Moreover, the NZD/JPY is highly responsive to economic news, both domestic and that of key trading partners, i.e. China.

Additional emphasis is also paid to the Reserve Bank of New Zealand’s monetary policy.