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Aug 03 - 12:55 AM

ING: Analysis on New Zealand's 2Q Jobs Data and NZD Outlook

By eFXdata  —  Aug 02 - 04:30 PM

ING reviewed the latest employment statistics out of New Zealand and provides an outlook on the NZD against the backdrop of global events and economic indicators.

Key Takeaways:

  1. 2Q Employment Data: New Zealand's labour market showed mixed signals in the 2nd quarter. Although the unemployment rate ticked up slightly more than expected to 3.6% from the previous 3.4%, there was robust hiring. However, wage growth decelerated a little, moving from 4.5% down to 4.3%. This gives a picture of a labour market that, while still tight, is showing initial signs of easing.

  2. NZD Dynamics: The New Zealand dollar (NZD) has seen some depreciation, particularly in sync with other pro-cyclical currencies. This is partly attributed to the ripple effects from the US credit rating downgrade.

  3. NZD Outlook: Despite these challenges, ING is optimistic about the NZD's prospects. They believe that most of the adverse impacts, such as China's growth adjustments and the Reserve Bank of New Zealand's (RBNZ) monetary policy pause, have been factored into the NZD's current price. In such an environment, if risk sentiment remains stable and there's diminished FX volatility, the NZD could become more appealing, especially for investors looking for carry trades and a rebound in currencies that are currently undervalued. ING's projection is for the NZD/USD to climb back to 0.63 by the fall.


New Zealand's 2Q employment figures portray a slightly easing labour market, with a small uptick in unemployment but a slowdown in wage growth. Despite the NZD's recent dip, primarily driven by external factors like the US's credit rating downgrade, ING maintains a positive medium-term outlook for the currency. They believe that given the current global economic landscape, the NZD could become a preferred choice for investors, leading to a potential appreciation to 0.63 against the USD in the coming months.

ING Research/Market Commentary


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