According to Citi, the Australian dollar (AUD) experienced a significant decline following a significant miss in the labor data. Employment change turned negative, contrasting sharply with the positive consensus. The unemployment rate, too, overshot consensus estimates, resulting in a dip in Aussie 3-year yields.

Citi emphasizes the importance of this development, noting that the Reserve Bank of Australia (RBA) has signaled that further rate hikes are data-dependent. With this unexpected labor data, the case for pauses is strengthened, especially considering the discrepancy with RBA's unemployment forecasts.

Following this labor data print, Citi Economics revised their call. They now anticipate a pause in June, but still expect a 25-basis point rate hike by August.

In terms of technical analysis, Citi maintains a bearish view on AUDNZD. After noting a morning star pattern on the daily chart earlier in the week, they are closely watching for potential support testing at the May 11 low. If the pair closes below this point, it would signal further bearish movement for AUDNZD.