AUD/NZD bulls attack 1.1100 as New Zealand employment data disappoints

• AUD/NZD takes the bids to extend the previous day’s rebound from one-week low.
• New Zealand’s Unemployment Rate, Employment Change surprised markets.
• Risk-aversion wave tames the pair’s upside momentum amid sluggish day-start.
• US-China headlines, China’s Caixin Services PMI will be important for fresh impulse.

AUD/NZD justifies downbeat New Zealand (NZ) employment data while picking up bids to refresh daily tops near 1.1110 during early Wednesday morning in Asia. Even so, a risk-off mood and a lack of major trading participation appeared to have tamed the cross-currency pair’s latest moves.

New Zealand employment numbers for the second quarter (Q2) raised concerns over the Reserve Bank of New Zealand’s (RBNZ) hawkish mood and drowned the New Zealand Dollar (NZD) on release. That said, NZ Unemployment Rate surprisingly grew to 3.3% versus 3.1% expected and 3.2% prior while the Employment Change dropped to 0.0% versus 0.4% market forecasts and 0.1% previous readings.

It should be observed that firmer prints of Australia's S&P Global PMIs for July also favored the AUD/NZD buyers. Australia's S&P Global Composite PMI rose past 50.6 figures to 51.1 whereas the S&P Global Services PMI increased more than 50.4 flash estimations to 50.9.

Elsewhere, the escalated geopolitical tension between the US and China, as well as hawkish comments from the Fed policymakers, also weighed on the AUD/NZD prices. It’s worth noting, however, that the Reserve Bank of Australia’s (RBA) failure to lure the bulls, despite the fourth rate hike, challenges the pair buyers.

China’s warning to the US, on House Speaker Nancy Pelosi’s visit to Taiwan, raised fears that the tussles among the world’s top-two economies will have more negative consequences for the world amid recession fears. “US House of Representatives Speaker Nancy Pelosi arrived in Taiwan late on Tuesday on a trip she said shows an unwavering American commitment to the Chinese-claimed self-ruled island, but China condemned the highest-level U.S. visit in 25 years as a threat to peace and stability in the Taiwan Strait,” said Reuters.

Additionally, talks of likely US restrictions on the chip-making machinery’s exports to China also magnified the Sino-American tussles. It’s worth noting that Beijing’s policymakers also showed a lack of confidence in this year’s Gross Domestic Product (GDP) and weighed on the AUD/USD prices, due to the strong China-Australia trade ties.

The RBA matched the market’s expectations of announcing 50 basis points (bps) rate hike, the fourth in 2022, while inflating the benchmark rate to 1.85%. However, the RBA Statement that says, “The central bank is not on the pre-set path in normalizing rates,” appeared to have lured the AUD/NZD bears the previous day.

Having witnessed the initial reaction to the down NZ data, AUD/NZD traders will pay attention to China’s Caixin Services PMI for July, expected 48 versus 54.5 prior, for fresh impulse. Also important will be the risk catalysts mainly comprising the Fedspeak and the Sino-American headlines.

Technical analysis

A daily closing below an ascending trend line from November 2021, around 1.1040 by the press time, becomes necessary for the AUD/NZD bears to take entry. Until then, the quote is expected to mark another attempt in challenging the 1.1200 threshold.