The BoJ’s quantitative easing has led to an accelerated search for yield elsewhere. In A yen for yield, we highlighted the bullish risks for NZD, AUD, and MXN against the JPY. More recently this has also catalysed a stronger bid in these currencies against the USD. As such, despite yesterday’s bounce in US 10y yields, NZD/USD is holding onto recent gains and is posting new highs for the year. The risk is that these trends to continue, with a break above the psychological 100.00 level in USD/JPY likely signalling an additional flight into high yielders.
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Barclays