AUD/NZD struggles around 1.1100 ahead of RBA policy and NZ employment data

• AUD/NZD has faced hurdles around 1.1100 as investors are anxious ahead of RBA policy.
• A third consecutive rate hike by 50 bps is expected by the RBA.
• Upbeat employment data is expected from the kiwi zone.

The AUD/NZD pair is facing barricades around the round-level resistance of 1.1100 in the early Tokyo session. The cross displayed a minor pullback after printing a fresh weekly low of 1.1076. The pair is likely to display volatile moves as investors are awaiting the announcement of the interest rate decision by the Reserve Bank of Australia (RBA) and employment data in the kiwi zone.

As per the market consensus, the RBA will elevate its Official Cash Rate (OCR) by 50 basis points (bps), consecutively for the third time. An announcement of the same will accelerate the OCR to 1.85%. RBA Governor Philip Lowe is bound to announce a rate hike as price pressures have climbed to 6.1% in the second quarter of CY2022 in Australia. Earlier, the inflation rate was recorded at 5.1%. A 100 bps increment in price pressures could be contained by policy tightening measures.

On the kiwi front, investors are focusing on the release of the employment data, which is due on Wednesday. A decent performance is expected on the labor front as the Employment Change is likely to improve significantly to 0.4% from the prior print of 0.1%. Also, the Unemployment Rate is expected to trim to 3.1% vs. 3.2% in the previous figure.

One thing is worth considering that the Labor Cost Index is expecting an improvement to 1.1% from 0.7% on a quarterly basis. The inflation rate is sky-rocketing in the kiwi zone and households need higher paychecks to offset the higher consumer expenditure.