New Zealand dollar tumbles in Asian session after weaker than expected employment data. Unemployment rate came in at 5.8% in Q1, unchanged from upwardly revised 5.8% in Q4. That's notably higher than expectation of a fall to 5.5%. Employment growth slowed to 0.7% qoq, inline with expectation. Private sector labor cost grew 0.3% qoq, below expectation of 0.4%. The Kiwi has been under some pressure since RBNZ signaled easing bias last month. Fresh selling pressure is also seen this week against Aussie after RBA dropped of its policy bias in the statement after yesterday's rate cut. Markets are generally viewing that RBA is finished with the current easing cycle. Released from Australia, retail sales rose 0.3% mom in March, below expectation of 0.4% mom.
The strong rebound in AUD/NZD and firm break of 1.0489 support turned resistance confirmed medium term bottoming at 1.0016, on bullish convergence condition in weekly MACD. Near term outlook will stay bullish as long as 1.0347 support holds and we'd expect stronger rise to 1.1300 resistance. At this point, there is no clear sign of trend reversal yet. We're viewing price actions from 1.0016 as corrective. That could turn out to be a medium term sideway consolidation pattern. Hence, we'd be cautious on strong resistance from 38.2% retracement of 1.3793 to 1.0016 at 1.1459 to limit upside.
Looking ahead, UK services PMI will be a main focus in European session today and is expected to drop slightly to 58.5 in April. But market reactions to the data could be muted as traders will have their eyes on tomorrow's general election in UK. Eurozone will release PMI services final and retail sales. US will release ADP employment in US session while Canada will release Ivey PMI. Some volatility could be seen in USD/CAD today with the back ground that crude oil is extending recent rally and is back above 60 level. The USD/CAD could face some renewed selling pressure in case of a weak ADP.