AUD/NZD clocks 1-1/2 month low after NZ CPI hits target

The bid tone around the New Zealand dollar strengthened in early Asia, pushing the AUD/NZD pair to its 1-1/2 month low of 1.0642 after the data released in New Zealand showed the inflation hit the target for the first time in five years.

The Q1 CPI rose 1% from the previous quarter, leading to an annualised inflation of 2.2%. Both figures beat estimates. The details reveal the jump in inflation was mainly due to rising petrol prices.

The 10-yr NZ government bond yield jumped from 2.94% to 3% following the CPI release.

On the other hand, the Aussie dollar remains on the back foot given the persistent weakness in key exports like iron ore. Even gold prices are losing height and that could add to the bearish pressure around the AUD.

AUD/NZD Technical Levels

The cross was last seen trading around 1.0650. A breakdown of support at 1.0628 (100-DMA) would open up downside towards 1.06 (zero levels) and 1.0581 (200-DMA). On the other hand, a breach of resistance at 1.0677 (previous day’s low) would expose 1.0748 (Feb 22 high). A daily close above the same would signal bearish invalidation and could yield 1.0801 (50-DMA).