Kiwi Dips On Weak Employment Data, Despite Solid Wage Figures

The kiwi dollar goes offered across the board after the release of New Zealand's Q2 labour force survey, which showed that the unemployment rate unexpectedly bounced from record lows.

• The jobless rate climbed to 3.3% in the three months through end-June from 3.2% recorded in Q1, with BBG consensus looking for a 3.1% print. As signalled before, this is the first time the unemployment rate prints above the expected level since 3Q2019.
• The uptick in unemployment was driven by breakdown data showing signs of a slowdown in momentum behind the local jobs market. Quarterly employment growth flatlined (it was expected to accelerate to +0.4%), while participation unexpectedly shrank to 70.8% from 70.9% in Q1.
• Wage figures beat forecasts, with average hourly earnings up 2.3% Q/Q (vs. BBG estimate of +1.3%). Quarterly wage inflation (LCI) printed at +1.1%, while the annual increase in labour costs was largest since late 2008, complicating the implications for RBNZ policy normalisation strategy.
• NZD/USD has shed 45 pips thus far and last sits at $0.6224, familiar technical contours remain in play.
• AUD/NZD has added 66 pips to last deal at NZ$1.1105, even as Australia/New Zealand 2-year swap spread has ticked higher in response to the release. The next topside technical target is provided by NZ$1.1197, a cyclical high printed on Jul 27.