Following The Upbeat Australian Employment Number, AUD / NZD Rises Above1.0750

The AUD / NZD exchange rate has increased by approximately 0.50% following the release of Australia's Employment Change data for the month of February. Employment Change came in at 64.6K, compared to 48.5K anticipated and -11.5K in the prior period. The unemployment rate has decreased from 3.7% to 3.5%. Full-time employment increased significantly from -43.3K to 74.9K.

After two negative readings in December and January, the positive employment data will likely encourage the Reserve Bank of Australia (RBA) to implement an additional 25 basis point (bps) rate hike at their next meeting, despite indicating a pause thereafter.

The Gross Domestic Product (GDP) data for the fourth quarter of 2022 in New Zealand were worse than expected, with the quarterly reading at -0.6% compared to -0.2% from the previous 2% and the annual reading at 2.2% compared to 3.3% from the previous 6.4%.

The economic contraction was caused by stagnant consumption, a decline in real national total disposable income, and a lack of investment in the industrial sectors. The economic impact of Cyclone Gabrielle is excluded from this figure, which represents the fourth quarter of 2022.

The Reserve Bank of New Zealand (RBNZ) may reconsider its hawkish stance at its April 5 meeting in light of this growth data. Despite the fact that many market analysts anticipate a 25 basis point rate hike from the RBNZ in April, the upside bias for AUD / NZD remains intact as economic data for both economies continues to diverge.