- AUD/NZD failed to hold above 1.0730 as investors feared ahead of NZ and Australian data.
- Rising job creation and falling unemployment rates in Australia point to rising future earnings.
- Australian consumer inflation expectations of 5.4% suggest the RBA is unlikely to restore price stability.
The AUD/NZD pair has sensed selling pressure while trying to hold above the critical resistance at 1.0730 in the Asian session. The crosses are struggling to extend the recovery as investors worry ahead of Thursday’s release of New Zealand’s gross domestic product (GDP) and Australian employment data.
Estimates put the New Zealand economy contracting by 0.2% against the 2.0% growth seen in the third quarter. Annual GDP (Q4) he expanded by 3.3%, lower than the previous 6.4% expansion. Weaker growth points to subdued household demand, which should ease the stress on Reserve Bank of New Zealand (RBNZ) policymakers trying to slow down inflation expectations.
Meanwhile, the release of Australian jobs data will bring power-packed action to the Australian dollar. According to consensus, the Australian economy saw him add 48.5K new jobs in February. Also, the unemployment rate is expected to fall to 3.6% from the previous report of 3.7%. Rising job creation and a falling unemployment rate point to higher future earnings as positive labor demand is offset by a high volume of offers from businesses.
Upbeat Australian labor market data could fuel inflationary pressures again as households have more cash to dispose.
Separately, Consumer Inflation Expectations (March) data, which shows inflation expectations over the next 12 months, is expected to rise to 5.4% from 5.1% in the previous release. If the same thing happens, more interest rates from the Reserve Bank of Australia (RBA) will be supported.