AUD/NZD steady around 1.0380s tops, despite RBNZ and RBA monetary policy divergence

• AUD/NZD edges up for the third day in a row amid a dismal than expected Australian jobs report.
• RBNZ rate hike in October could be the prelude to more hikes coming in the short term.
• RBA cemented its dovish stance on a worse than expected Australian employment report.

The AUD/NZD has been moderately edging up in the last three sessions. As the Asian Pacific session begins, the pair is barely up 0.05%, trading at 1.0385 during the day at the time of writing.

On Thursday, the AUD/NZD during the Asian session dipped as low as 1.0355 as the market dissected a dismal Australian report. However, throughout the day, the Australian dollar licked its wounds, bouncing off the lows, reaching a daily high at 1.0400, but in the end, it retreated to its current price.

Australian Employment Change dropped 46.3K, and the unemployment rate jumped above 5%

Further, the Australian economic docket featured the Employment Change for October, which fell 46.3K, sharply lower than the 50K rise expected by analysts, spurring a jump in the Unemployment Rate, from 4.7% to 5.2%.  That cemented the Reserver Bank of Australia (RBA) dovishness, as expressed by Governor Lowe at the press conference after unveiling the bank's monetary policy statement.

Central bank monetary policy divergence would be the main driver for the AUD/NZD

On its last monetary policy meeting, the Reserve Bank of New Zealand hiked its Overnight Cash Rate by 25 basis points, up to 0.50%, taking the lead amongst major developed countries. Also, the bank said that it would remove stimulus measures as the New Zealand economy continue its recovery.

According to sources cited by Reuters, said that the "RBNZ won't stop here. October marks the beginning of a new chapter for the cash rate: Onwards and upwards."

Most analysts expect a similar rate hike in November, February, and May.

Moving to the Reserve Bank of Australia (RBA), the RBA unwound its pandemic-stimulus packaging on its last monetary policy when it dropped the Yield Curve Control. Furthermore, it opened the door for an earlier hike rate, removing the 2024 calendar target on its monetary policy statement.

Yet, the RBA Governor Philip Lowe reiterated to market participants that the bank would be patient with its monetary policy and rejected that a hike could come as early as May 2022. Furthermore, keep its bond purchasing program at a pace of A$4 billion a week and emphasizes that inflation is expected to be around the 2.5% RBA target band by the end of 2023.

That said, and driven by recent economic data, the NZD could rise in the near term against the AUD, but the RBNZ will have its last monetary policy of the year by November 24, where the market expects a 50 basis point increase, according to futures market expectations.