Pacific Currencies Rally: Jobs and Inflation Data Fuel Hawkish Breakouts

The Australian Dollar (AUD) and New Zealand Dollar (NZD) are outperforming major peers this week, driven by domestic data that challenges the global narrative of imminent rate cuts.

AUD/USD: The Breakout

AUD/USD has staged a technical breakout from its multi-month consolidation range. The catalyst was a robust jobs report that prompted traders to re-price the Reserve Bank of Australia's (RBA) policy path.

• Technical View: Société Générale analysts note that holding the 0.6650–0.6720 support zone is critical to maintaining this bullish momentum.
• Caution: ING warns that while the labor market is tight, inflation expectations may be lagging reality. If upcoming CPI data does not validate the jobs strength, the “hawk” narrative could quickly unwind.

NZD: Stubborn Inflation

Across the Tasman, the Kiwi Dollar found support from firm CPI expectations. Fourth-quarter inflation is projected to hold at 3.0% YoY, slightly above the Reserve Bank of New Zealand's (RBNZ) forecast. This “sticky” inflation print is forcing the market to price out aggressive easing bets, providing fundamental support for the currency even as broader risk sentiment fluctuates.

In the near term, both currencies are benefiting from the “soft landing” narrative gaining traction in the US and the stabilization of Chinese equity markets.