Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
NZD/JPY May Fall as US-China Tensions Escalate Over Hong Kong

NZD/JPY May Fall as US-China Tensions Escalate Over Hong Kong

Dimitri Zabelin, Analyst
What's on this page

New Zealand Dollar, Japanese Yen, NZD/JPY, Coronavirus – TALKING POINTS

  • US stocks spiked on jobs data, Treasury lifeline to distressed airlines
  • Risk-on tilt could be derailed by US-China tensions over Hong Kong
  • NZD/JPY trading on the cusp of key resistance – what happens now?

US equity markets ended on an upbeat note with the Dow Jones, S&P 500 and Nasdaq indices closing 0.36, 0.45 and 0.52 percent higher, respectively. Better-than-expected US jobs data helped buttress investors’ buoyancy along with news that the US Treasury is considering additional stimulus to distressed airlines. Spreads on credit defaults swaps for insuring corporate debt across the risk spectrum showed signs of relaxation.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Dimitri Zabelin
Improve your trading with IG Client Sentiment Data
Get My Guide

Foreign exchange markets reflected a strong risk-on tilt with the cycle-sensitive New Zealand and Australian Dollars ending as Wall Street trade’s champions. This came at the expense of the anti-risk Japanese Yen and US Dollar who were punished by traders prioritizing returns over liquidity. Soft and hard commodities were mostly up for the day with Brent closing 1.76 percent higher.

Friday’s Asia-Pacific Trading Session

A relatively sparse data docket may mean that traders will be placing more of an emphasis on macro-fundamental themes over statistical publications. Bilateral stress in geopolitical relations between Beijing and Washington over the former’s passage of a sweeping national security bill for Hong Kong could undermine market mood. In a risk-off environment, NZD/JPY may pull back along with emerging market FX, stocks, and other sentiment-driven assets.

On Wednesday, the US House of Representatives unanimously passed a bill that would penalize banks who do business with Chinese lawmakers affiliated with Beijing’s new national security laws. It was subsequently passed along to the Senate who quickly approved it and sent it to the White House. Donald Trump’s approval would likely strain already-fragile US-China relations and cast a dark shadow over sentiment.

NZD/JPY Technical Analysis

NZD/JPY closed just under the top tier of the narrow but critical, two-layered inflection range between 69.897 and 70.000. The wick on the most recent candle indicated a strong desire to climb above that range, but the lack of follow-through signaled an underlying uncertainty. If NZD/JPY again fails to clear this ceiling, it could put the pair’s upside potential into doubt and cause it to pullback.

NZD/JPY – Daily Chart

Chart showing NZD/JPY

NZD/JPY chart created using TradingView

--- Written by Dimitri Zabelin, Currency Analyst for

To contact Dimitri, use the comments section below or @ZabelinDimitri Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.