NZD/USD: improving job market – Brown Brothers Harriman

Brown Brothers Harriman notes that NZD/USD is trading heavy around 0.6000, despite improvements in New Zealand's labor market. The Q4 labor market data showed an unexpected increase in employment, although the unemployment rate rose slightly. The report indicates that there is still significant spare capacity in the economy, which may ease wage pressures.

New Zealand labor market update

"New Zealand Q4 labor market data showed an improving job market and contained wage pressures. Employment increased more than expected by 0.5% q/q (consensus: 0.3%, RBNZ forecast: 0.2%) vs. 0% in Q3, and private regular wages undershot expectations at 0.4% q/q (consensus & RBNZ forecast: 0.5%) vs. 0.5% in Q3."

"An increase in labor supply can further ease wage pressure. New Zealand’s swaps curve trimmed slightly odds of 50bps of hikes by year-end."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)