AUD/NZD REFRESHES FOUR-DAY HIGH AT 1.0970 ON DOWNBEAT NZ EMPLOYMENT DATA

The AUD/NZD pair has printed a fresh four-day high at 1.0970 in the early Asian session. The cross has got strength after the release of downbeat New Zealand Employment (Q4) data.  The Employment Change dropped to 0.2% from the expectations of 0.3% and the former release of 1.3%. While the Unemployment Rate has increased to 3.4% from the consensus and the prior release of 3.3%.

Signs of losing threads in the tight labor market of New Zealand indicate that inflation projections will trim further as retail demand may get dents. Meanwhile, the Labor cost index has remained mixed, which will still be a concern for the Reserve Bank of New Zealand (RBNZ) ahead. The quarterly Labor cost index has landed at 1.1% lower than the estimates of 1.3% but similar to the prior release of 1.1%. On an annual basis, the economic data has remained in line with the expectations of 4.3% and higher than the 3.8% the prior release.

The interest rate hike spell by the RBNZ Governor Adrian Orr is not paused yet as the Consumer Price Index (CPI) is still beyond 7%. However, lower employment generation might trim inflation projections ahead.

On the Australian front, the Australian Dollar has picked strength on upbeat S&P Global Manufacturing PMI data. The economic data has climbed to 50.0 vs. the consensus and the former release of 49.8. This week, the Australian Dollar remained extremely volatile after the release of the downbeat monthly Retail Sales (Dec) data.  Lower retail demand might force the firms to look for easing prices of goods and services at factory gates. This would also delight the Reserve Bank of Australia (RBA) ahead.

For further guidance, the New Zealand Dollar and the Australian Dollar will dance to the tunes of the Caixin Manufacturing PMI (Jan) data, which is seen higher at 49.5 from the former release of 49.0. It is worth noting that the antipodeans are the leading trading partners of China.