Australian employment beat expectations rising by 10.7K versus 0.2K eyed helping to push AUDUSD above the 1.0400 in early Asian trade, but the pair saw no follow through in European dealing as broader risk aversion flows capped the rally.

Australian employment picture improved markedly with jobless rate declining to 5.4% from an expected rise to 5.5% as the number of full time jobs increased for the fourth consecutive month rising by 18.7K. Temporary jobs lost -8K in the month of October. The news continues to confirm that Australia’s mining industry is the primary driver of growth adding 45K jobs year to date while the construction sector has shed 70K jobs this year.

The robust labor demand in Australia may have been one the critical factors that led the RBA to keep rates steady at 3.25% instead of lowering them as many market analysts expected. That policy choice has boosted the Aussie with the pair rising above the 1.0400 level in recent days, but it has had difficulty making much progress beyond that level in tonight’s session as markets keep a wary eye on the upcoming Spanish bond auction and the ECB meeting later today which could set the tone for trade for the rest of the day.

Meanwhile the upward surprise in Australia stood as sharp contrast to the disappointing labor data out of New Zealand where the unemployment rate rose to 7.3% from 6.7% eyed. The stark difference in job creation led to a strong rally in AUDNZD with the pair breaking through the 1.2700 level. If the weak labor data leads the RBNZ to consider a rate cut as the year comes to a close the cross could challenge the 1.3000 figure on interest rate differential flows.