AUD/NZD sees an upside above 1.1100 ahead of Australian Inflation data

• AUD/NZD is eyeing more gains post overstepping the critical hurdle of 1.1100.
• In addition to weak labor data, higher inflation consensus is joining as a headwind for the RBA.
• RBNZ sees that inflationary prices may top sooner.

The AUD/NZD pair is struggling to surpass the immediate hurdle of 1.1100 in the Tokyo session as investors are awaiting the release of the Australian inflation data. On a broader note, the asset is oscillating in a 1.1073-1.1100 range after a juggernaut rebound.

It seems that out of the two antipodeans, an unprecedented third term for China’s XI Jinping in power supported the aussie bulls. Well, the event has triggered the risk of a further slowdown in the Chinese economy as China’s Jinping could continue the no-tolerance Covid-19 approach.

This week, the event of the Australian Consumer Price Index (CPI) release will be keenly watched for taking cues about the likely monetary policy action by the Reserve Bank of Australia (RBA), which will take place next week. As per the projections, the headline inflation will accelerate to 7.0% vs. the prior release of 6.1% on an annual basis. On a quarterly basis, the plain-vanilla CPI could decline to 1.5% against the prior print of 1.8%.

It is worth noting that Australia’s employment data, released last week, was extremely poor, and now higher consensus for inflationary pressures could make the job for RBA Governor Philip Lowe more cumbersome.

On the NZ front, comments from Reserve Bank of New Zealand (RBNZ)'s Chief Economist, Paul Conway is hopeful that inflationary pressures are peaked now.  He believes that evidence is available citing a cool-off in price pressures. Housing prices are declining, which could slow down consumption. He further added that China is no longer the deflationary force it once was.