New Zealand Dollar Falls After Mixed Jobs Report

The New Zealand dollar rose to $0.597 but stayed close to its lowest level in almost two weeks, amid reduced bets for an imminent rate hike from the Reserve Bank. A mixed jobs report earlier in the week, showing an unexpected rise in unemployment to a decade high, while employment increased more than forecast, prompted markets to push back expectations for a near-term rate hike. Traders are not fully pricing in an increase until October, while the implied probability of a September move stands at about 70%. The RBNZ is set to meet later this month in what will be the first meeting under its new governor, Anna Breman, and policymakers are widely expected to leave rates unchanged. The central bank will also release updated economic and interest-rate projections, with markets closely watching whether it maintains its guidance for a first rate increase around mid-2027. For the week, the kiwi has fallen about 1%, on track to snap a three-week winning streak.

The New Zealand dollar fell to $0.599, moving away from a near seven-month high, as mixed labor market data reinforced views that the Reserve Bank may keep interest rates unchanged for now. The unemployment rate ticked up to 5.4% in the fourth quarter, its highest level since 2015, slightly above both the previous reading and market forecasts of 5.3%. However, employment rose by 0.5% over the quarter, stronger than the estimated 0.3% growth. Overall, the figures were broadly in line with the RBNZ’s projections and are unlikely to prompt an immediate shift in monetary policy. As a result, markets reduced bets for a near-term rate hike, with expectations for a move pushed back from September to October. Some economists expect the first increase by December, while others see it occurring in 2027. Meanwhile, a strong dairy auction offered some support, helping to limit deeper losses for the kiwi.

The New Zealand dollar climbed to around $0.605, moving back toward a seven-month high after a two-day decline, as markets increasingly priced in expectations that the RBNZ will start raising rates later this year. Attention has now turned to labor market data due this week, with the Q4 unemployment rate expected to hold at 5.3%, its highest level since 2016, while employment is forecast to grow by 0.3%. While the data may justify delaying policy tightening until the second half of the year, above-target inflation and firming economic growth leave little doubt that the next policy move will be a rate hike. Policymakers meet on February 18, marking the first decision under new Governor Anna Breman, who is expected to outline her policy vision. Meanwhile, gains were capped by renewed strength in the US dollar after President Donald Trump nominated Kevin Warsh as Fed chair, a move markets view as hawkish and less supportive of aggressive rate cuts.