- NZD/JPY has mostly retraced its steps, returning to similar levels last seen at the start of the year (pre-COVID).
- However, the real implied yield for NZD/JPY seems to have worsened this year, which should place some downside pressure on the pair.
- As a second wave of COVID-19 washes over the world, the coming winter season provides threatens to create another risk-off event.
- Regardless, as our OECD PPP model implies, NZD/JPY is currently trading at close to fair value. With a weaker real yield, upside is likely limited.
For further details see:
NZD/JPY: Upside Is Limited In The Medium Term As Winter Beckons