NZD/JPY
The Asian session saw the yuan being fixed at low levels not seen since December 2015, as Eamonn reported earlier. This appears to be the latest tactic in the trade war from China. For a quick read on the approach of China and with link to some background to this story check out Justin's article yesterday. The trade war/spat continues and headlines are going to keep rocking this one about for awhile yet, so expect periods of JPY strength to periodically appear at the drop of a hat, or rather, at the drop of a tweet. It is also worth having in the back of your mind that the BOJ has been slowing the pace of asset purchases to nearly half their annual rate. Any little helps for JPY strength worth noting. However, it is not that the market is paying any obvious attention to that fact.
NZD business confidence data was also out last night and this showed that business confidence was at a 7 month low. Furthermore, 39% of respondents saw business conditions deteriorating in the next 12 months. The RBNZD and Governor Orr will be issuing their rate statement later on today at 2200 BST. Eamonn has a preview here of the meeting. The consensus is 'on hold' and a bearish outlook is priced in to the run up into the meeting. Any surprise is likely to be to the upside, but as noted in the preview, with a new Governor in situ be careful of over analysing a change of wording. It may simply be a change of presentation as opposed to signalling a change of monetary policy direction.
In the run up to that meeting, during the next two sessions, I like the look of a NZD/JPY short at the Fib retracement level of 50 - 61.8% (75.24). Stops running above last night's highs (75.53) and look to run a position down deeper into the support level at 74.60.
