• A sheer downside move has resulted in a fresh two-week low at 1.1050 for AUD/NZD.
• The announcement of an OCR hike by 50 bps is in line with the expectations.
• This week, the NZ employment data will remain in focus.

The AUD/NZD pair has dropped swiftly after the Reserve Bank of Australia (RBA) announced a rate hike by 50 basis points (bps) in the Asian session. The announcement has remained in line with the estimates and the Official Cash Rate (OCR) has stepped up to 1.85%.

To contain price pressures, RBA Governor Philip Lowe has tightened the monetary policy further. The inflation rate in Australia has increased to 6.1% in the second quarter of CY2022 much higher than the prior figure of 5.1%. A higher inflation rate is likely to persist for longer, however, the RBA is committed to bringing price stability to the economy.

On the NZ front, investors are focusing on the release of the employment data, which is due on Wednesday. The employment data is expected to remain upbeat 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.