The report from Brown Brothers Harriman (BBH) highlights that NZD/USD is trading heavy around 0.6000, with New Zealand's Q4 labor market data showing an improving job market. Employment increased more than expected, although the unemployment rate rose slightly. The RBNZ's outlook on rate hikes has been adjusted lower, reflecting ongoing spare capacity in the economy.

New Zealand labor market shows improvement

"New Zealand Q4 labor market data showed an improving job market and contained wage pressures."

"The unemployment rate unexpectedly increased 0.1pts to 5.4% (consensus & RBNZ forecast: 5.3%), the highest since Q3 2015. But it was for good reasons as more people entered the labor force."

"There’s still significant spare capacity in the New Zealand economy, with the output gap projected to average -1.1% of potential GDP over 2026 vs. -1.6% in 2025."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)