AUD/NZD dives below 1.0940 on poor Australian Employment data

• AUD/NZD has tumbled below 1.0940 amid poor performance of the Australian labor market.
• The Australian administration has created 17.6k new jobs against the estimate of 40k.
• To reduce the risk of high inflation, the RBNZ has increased its OCR by 50 bps.

The AUD/NZD pair is plunging firmly after recording a high of 1.0968 in early Tokyo amid the poor performance of the Australian labor market. The cross has slipped below 1.0940 and is likely to tumble further, considering the vulnerable economic data.

The Australian Bureau of Statistics has reported the Unemployment Rate at 4%, underperforming the consensus of 3.9%. Apart from that the Australian administration was expected to create 40k additional jobs, however, the print of 17.9k in the Employment Change category is showing vulnerable labor market conditions.

It seems that the Australian economy needs sufficient time to achieve full employment levels. This has also underpinned a neutral stance by the Reserve Bank of Australia in May’s interest rate announcement. Last week, RBA Governor Philip Lowe announced an unchanged interest rate policy and also dictated that the RBA sees no price pressure that should compel a sudden rate hike.

Meanwhile, the kiwi docket raised its Official Cash Rate (OCR) by 50 basis points (bps) on Wednesday. To contain soaring inflation, the Reserve Bank of New Zealand (RBNZ) increased its policy rate to 1.5%. The RBNZ looks reach to neutral rates as early as possible as a swift move approach to a neutral stance will reduce the risks of inflation. The first quarterly inflation levels in Calendar Year (CY) 2022 of the kiwi area are seen at 6.4%.