Kiwi is trading downside due to the China’s inflation figures extending the losses by following the comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr. China’s Consumer Price Index (CPI) reduced more than 0.0% expected to -0.3% whereas the Producers Price Index (PPI) eased below 0.4% market consensus to 0.3% YoY in January. The data joins the latest downbeat economic signals from the world’s largest commodity user, also New Zealand’s major customer, which in turn weigh on the NZD/USD prices.

New Zealand’s recent inflation data have been upbeat, and on the positive note, strong employment figures, the RBNZ boss didn’t rule out the coronavirus (COVID-19) risks while also praising the moves to control housing market loans via the Loan-To-Value ratios.

On the other hand, market risks remain somewhat positive as traders await the US stimulus while debate continues in the Congress. Also important are the latest positive developments over the covid vaccines and chatters surrounding trade-tier among the western countries.

As far the yen is concerned,  Japanese stocks erased early losses and rose on Wednesday as an earnings forecast upgrade from Honda backed expectations for an improving outlook for corporate profits amid an improving global economy. Since the start of the year, the Nikkei has rallied more than 7% to its highest level since 1990 as investors and the Japanese exporters that are expected to benefit as the global economy recovers from the COVID-19 pandemic.

The Bank of Japan must be mindful of the potential demerits of its huge asset purchases, board member Toyoaki Nakamura said in a sign the central bank will seek ways to make its asset-buying programme more flexible in a policy review due in March. Nakamura, a former business executive who joined the board in July, said the BOJ’s purchases of exchange-traded funds (ETF) has helped eradicate Japan’s deflationary mindset by keeping stock markets stable.

“The BOJ’s ETF purchases … will remain a necessary tool,” Nakamura said in a speech at an online meeting with business leaders on Wednesday.

NZD/JPY 4 Hour Chart:

Support: 75.44 (S1), 75.19 (S2), 74.84 (S3).

Resistance: 76.05 (R1), 76.39 (R2), 76.65 (R3).

As all the factors favors Yen and NZD remains in the downtrend despite some positive catalysts, we expect a bearish trend for NZD/JPY.