- A simple bearish move led to a new 2-week low at 1.1050 for AUD/NZD.
- The announcement of a 50 bps rise in the OCR is in line with expectations.
- This week, New Zealand employment data will remain in focus.
The AUD/NZD pair fell rapidly after the Reserve Bank of Australia (RBA) announced a 50 basis point (bp) rate hike during the Asian session. The announcement remained in line with estimates and the official exchange rate (OCR) rose to 1.85%.
To contain price pressures, RBA Governor Philip Lowe further tightened monetary policy. Australia’s inflation rate increased to 6.1% in the second quarter of calendar year 2022, well above the previous figure of 5.1%. A higher inflation rate is likely to persist for longer, however, the RBA is committed to bringing price stability to the economy.
On the New Zealand front, investors are focused on the release of jobs data, which is due on Wednesday. Employment data is expected to remain bullish as the employment change is expected to improve significantly to 0.4% from the previous print of 0.1%. In addition, the unemployment rate is expected to decline to 3.1% from 3.2% in the previous figure.
One thing worth considering is that the labor cost index is expecting an improvement to 1.1% from 0.7% on a quarterly basis. The inflation rate is skyrocketing in the Kiwi Zone and households need higher wages to offset higher consumer spending.