AUD/NZD lined up at critical support ahead of Aussie jobs data

AUD/NZD continues to bump along a weekly support structure with the Kiwi leading as the dominant currency of the cross due to central bank outlook divergence whereby the RBA, regardless of how well the economy performs between now and their meeting on the 4h Feb, is expected to cut rates. The RBNZ, however, hangs more in the balance of data ahead of their 14th Feb meeting. 

Today's session will be crucial for the Aussie, although that does not necessarily mean we will see fireworks. We will finally get to see the outcome of the highly anticipated jobs data, more specifically, the unemployment rate. 

RBA has put a great deal of emphasis on Dec's unemployment rate

The RBA has put a great deal of emphasis on today's result although expectations are in line with the prior of 5.2%. Considering how expectations of a disappointment have already been priced in, should that be the case, we could see come short covering in the Aussie, which has been walking a tight-rope on daily support vs the greenback. 

On another hand, any further deterioration in the rate will likely encourage a final onslaught ( a spike to the downside followed by continued waves of fading rallies over time) by the bears as we approach the Consumer Price Index towards the end of the month – Dec 2019 expected for release on 29/01/2020.

"The December labour force survey for Australia (11:30am Syd/8:30am Sing/HK) is expected to see the trend deceleration in employment growth apparent since May persist," analysts at Westpac argued, and who explained that following November’s outsized 37k gain, they are looking for a 5k decline in December (mkt +12k). Holding participation flat, the unemployment rate is likely to lift to 5.3%.

AUD/NZD levels

A positive outcome in today's data will likely see AUD/NZD lift with a focus on a run towards the -27% Fibo of the impulse from current levels to prior swing highs at 1.0460. This is a level located at 1.0480 with a confluence of the Dec 2019 support/resistance structure. The first hurdle will be1.0390/1.04 the figure and confluence of the 21-day moving average, an area that will need to contain bearish pullbacks before bulls get the green light to target higher grounds. Considering the CPI and RBA is yet to unfold, bulls will be hesitant to commit fully on any breaks to the upside. On the flip side, a break of the 1.0360s opens risk to 1.0340s as the last defence to the Jan low, 1.0315 and beyond.