ING analysts expect Q2 labor figures to align with RBNZ projections, supporting a September or October rate increase.
New Zealand’s second-quarter labor market data, due tonight, is expected to show a modest 0.1% quarter-on-quarter employment gain and a slight rise in unemployment to 5.4% from 5.3%. The figures would broadly match the Reserve Bank of New Zealand’s May forecasts, which implied one to two rate hikes in the third quarter.
Markets have priced in 20-25 basis points of tightening for the RBNZ’s September 2 meeting, following July’s hike. ING’s Francesco Pesole sees growing conviction for a September move, though he cautions that markets may be overestimating the scale of the tightening cycle, with 75 basis points priced in by February.
NZD/USD has held near 0.585–0.590, with ING targeting 0.59 by year-end and 0.60 increasingly plausible. The currency has outperformed AUD recently, supported by a more hawkish RBNZ outlook compared to the RBA’s dovish repricing after softer inflation data.