The trade is a short-term tactical trade around AU employment report on Thursday. Barclays expects a decent upside surprise from an employment change to outweigh a small negative surprise from the unemployment rate and be AUD positive. Barclays prefers trading it against NZD given the cross’s sensitivity to relative data surprises from Australia and NZ.
“We expect a decent upside surprise from the AU employment change (Barclays: 20.0K; consensus: 13.2K), while the unemployment rate disappoints slightly (Barclays: 6.1%; consensus: 6.0%). A positive surprise from an employment change is likely to outweigh, and we see modest short-term upside risk to AUD post-data release, especially against NZD,” Barclays clarifies.
Barclays recently tightened the stop-loss on its long AUDNZD (entered at 1.0740), but remains bullish on the cross, targeting 1.1085.