Rebound in Kiwi-Yen Signals Recovery in Global Risk Appetite

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The delta virus strain is threatening to upend the global recovery but a closely watched currency pair indicates that risk appetite is on the mend.

The New Zealand dollar-yen pair, a barometer of sentiment, has recovered the bulk of its 50% pullback since May, suggesting optimism about the outlook. Efforts to contain the virus outbreak in the South Pacific nation are bearing fruit, offering hope that the global spread of the delta variant can be checked.

Signs that a recovery is taking hold in major economies are propping up risk assets, with the European Central Bank the latest to indicate that a withdrawal of stimulus may be on the way. Global stocks are hovering near record highs and emerging-market currencies have recouped some losses, adding to the overall positive tone. 

Rebound in Kiwi-Yen Signals Recovery in Global Risk Appetite

“The kiwi has been sold notably and NZD/JPY serves as one gauge for risk sentiment,” said Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan. “The recovery of the 50% retracement of the decline is a sign that risk-positive momentum is back.”

The kiwi-yen currency pair has climbed from a seven-month low and was trading around 77.64 at noon on Wednesday in Asia. 

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