NZD/JPY CONSOLIDATES GAINS, DIVERGING RBNZ AND BOJ POLICIES STIR MOVEMENTS

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  • The NZD/JPY trades at 91.567, recording 0.23% losses in Monday's session.
  • The RBNZ is expected to continue hiking, leading to a terminal rate of 6% by April.
  • Markets are betting on a BoJ liftoff by June.

In Monday's session, the NZD/JPY declined to 91.55 with a slight downtrend of 0.23%. As market participants anticipate diverging strategies between the Reserve Bank of New Zealand (RBNZ) and Bank of Japan (BoJ), NZD/JPY the Kiwi is set for further strengthening as the downside could be explained by investors taking profits and consolidating gains.

The RBNZ Governor Orr appeared before a parliamentary committee and maintained a hawkish stance, signaling that steady inflation at 4.7% YoY is still above the 2% target and hinting that additional tightening may be appropriate. As for now, the odds of a February hike stand at 33% and rose to 65% by May.

In addition, as the New Zealand economic climate remains robust, fueling expectations of a more aggressive central bank policy, the slow economic growth and low inflation in Japan could push BoJ towards further easing and delay a lift until June weakening the pair. Key economic indicators and policy announcements from both banks will likely shape the NZD/JPY pair's dynamics substantially, with market participants eyeing upcoming RBNZ and BoJ meetings


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