NZD/JPY rises to 9-day high

NZD/JPY rose to a high of 76.73; the highest level since April 11 as the New Zealand bond yields spiked following the release of a strong NZ CPI data.

NZ-Japan yield spread widens

The 10-year yield jumped from 2.94% from 3.0% after the data released earlier today showed the NZ CPI jumped 1% q/q and 2.2% y/y in the first quarter. The annualised figure stands at a 5-year high and is well above the RBNZ forecast of 1.5%. The central bank was not expecting inflation to rise to 2% until 2020.

In the meantime, the bid tone around the JPY seems to have weakened somewhat. Moreover, the Japanese 10-year bond yield fell below zero percent on Wednesday. The resulting widening of the NZ-Japan 10-yr yield spread clearly favors further rise in the NZD/JPY cross.

NZD/JPY Technical Levels

The pair was last seen trading around 76.73. A break above 76.86 (Apr 6 low) would expose 77.56 (200-DMA), above which the gains could be extended to 78.40 (Mar 31 high). On the downside, breach of 76.20 (session low) could yield a re-test of 75.86 (Apr 17 low) and 75.63 (Apr 12 low).