NEW ZEALAND: Firmer Jobs Growth Offset By Higher U/E Rate, RBNZ Likely On Hold
The NZ Q4 jobs report was a mixed bag. On the positive side, the jobs growth picture was better than forecast, rising 0.5%q/q, versus 0.3% forecast and flat in Q3. This was the strongest q/q rise since Q2 2023. It also bought the y/y pace back to positive territory at 0.2%, which was also above expectations and from a revised 0.7%y/y fall in Q3. The unemployment rate edged up to 5.4%, above both the market consensus and RBNZ forecast of 5.3%. The participation rate rose to 70.5%, versus 70.3% forecast (which was also the prior outcome). Arguably we would have needed to see a combination of stronger jobs growth and a lower unemployment rate to get the market more excited about a potentially earlier 2026 rate hike from the RBNZ.
- The data suggests that the better economic tone for NZ through late 2025 aided jobs growth, but is yet to erode spare capacity in terms of the unemployment rate. The chart plots the y/y jobs growth figure (the white line) and the unemployment rate (orange line). The unemployment rate in Q4 was at its highest since 2015.
- Stats NZ Noted: "underutilisation rate was unchanged at 13.0 percent", while on wages, "The labour cost index (LCI) all salary and wage rates (including overtime) increased 2.0 percent in the year ended December 2025, while the unadjusted LCI increased 3.3 percent."
- The labour cost index is down slightly from Q3's pace of 2.1%y/y. This remains well off 2023/24 highs above 4%y/y.
Fig 1: NZ Jobs growth Y/Y (White Line) & Unemployment Rate (Orange Line)
Source: Bloomberg Finance L.P./MNI
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AUD: A$ Up From Earlier Lows, Positive Technical Backdrop Holds, CPI Wed
AUD/USD tracks near 0.6685/90 in latest dealings, down around 0.10% versus end Friday levels, as modest risk off grips markets to start the week (earlier lows were at 0.6676). This follows the US capture and extradition of Venezuelan leader Maduro. Focus will be on broader risk trends, particularly in terms of oil and US equity futures. For oil, any market expectations around increased Venezuelan supply may take time to realize. The A$ could also see some offset from higher precious metal prices if risk off losses gain traction in the equity space.
- At this stage, the broader technical backdrop for AUD/USD is unchanged, which is still constructive. The pair remains above all key EMAs. The 20-day EMA is near by, close to 0.6660, while the 50-day is around 0.6610. On the topside, we can't hold moves above 0.6700 at this stage, with late 2025 highs at 0.6729, remaining intact.
- Broader risk/commodity price moves are likely to dictate sentiment today. The local data calendar swings back into gear tomorrow, with Dec final PMI reads for the S&P Global services and composite indices.
- Greater focus will rest on Wednesday's Nov CPI print though. Headline is forecast at 3.6%y/y (versus 3.8% prior), while the trimmed mean is seen unchanged at 3.3%y/y, per the market consensus.
NZD: Modest Risk Off In FX Post Venezuela News, NZD/USD Downside Limited
NZD/USD is up from earlier lows (0.5748), last around 0.5760/65, which leaves us down a touch versus end Friday levels. Market sentiment is slightly risk averse in the FX space to start Monday trade, as markets react to the weekend news of Venezuelan leader Maduro being captured and taken to the US. Still, aggregated moves are very modest at this stage. The A$ is weaker, off by around 0.20%, while JPY and CHF are marginally stronger. USD/MXN sits up a touch, +0.30%, as well.
- Focus as the session progresses will be how broader risk sentiment unfolds, fall out on oil prices and US equity futures watch points, although significant moves are likely needed to impact NZD sentiment.
- For NZD/USD, broader technicals remain in play. Recent lows around 0.5740 remain intact, which if broken could bring 0.5700 into focus. On the upside, interest may rest around the 100-day EMA near 0.5785/90. Late Dec highs for the pair are some distance away at 0.5853.
- Local NZ markets return today after the new year break. The local data calendar is very light this week, with just Dec Cotality home value figures out later this evening. Next week we get Nov filled jobs, along with food prices as well.
OIL: Material Increase In Venezuelan Oil Likely To Take Some Time
Oil may start the week lower following the US ousting of Venezuelan dictator Maduro but there is a lot of uncertainty ahead for the country and its oil sector. Venezuela is currently being run by Maduro’s ally Rodriguez but President Trump has warned her to cooperate. The oil industry has been neglected and private investment will be needed to increase output as well as a lifting of sanctions. So while the weekend’s developments could result in an increase in global supplies it is likely to take time and the outlook is unclear.
- Secretary of State Rubio has said that it will take time for democracy to return as most of the opposition lives outside of Venezuela. He said oil is important to the future of the country and royalties will go to the Venezuelan people.
- In the 1990s, Venezuela produced over 3mbd and OPEC reported that recently it was 1mbd which is above its 2020 trough. The industry needs significant investment after an extended period of neglect which will be a long process and so there is unlikely to be an increase in Venezuelan oil exacerbating the 2026 market surplus. Chevron has kept a presence in the country producing about a third of its crude output.
- US Gulf refineries are geared for heavy, sour crude – the type from Venezuela, according to Bloomberg.
- Oil was little changed on Friday given ongoing thin volumes due to holidays. WTI fell 0.2% to $57.33/bbl off the intraday low of $56.60, while Brent was down 0.1% to $60.80/bbl after falling to $60.01.
