AUDNZD: We remain Long (Strategy Views from Credit Agricole)NZ’s labour market data surprised the market and us to the upside. While labour
market tightness is easing with the unemployment rate ticking up to 4% and private
sector wages growth slowing further, this is happening slower than the RBNZ
would like. The central bank had been looking for a rise in the unemployment rate
to 4.2%. This will leave the central bank reluctant to cut rates. But with migration
slowing sharply, a significant source of growth as well as inflation, and higher rates
and prices biting into consumer demand, NZ’s economy continues to grow
significantly below trend and will give the RBNZ the ability to cut rates in Q324 and
earlier than the central bank’s forecast of 2025. We also continue to think that this
will be earlier than the RBA and so remain long AUD/NZD.