NZD: NZD/USD - Looking To Test Overnight Highs As Risk Rebounds In Asia

The RBA is likely to be reassured by the easing in unit labour cost and compensation growth as well as inflation across key sectors based on implicit price deflators. However, Australia’s productivity problem continues with it recording its weakest quarter since Q3 2024. The next Board decision is 16 June and it is likely to be on hold after 75bp of tightening as it monitors data and events.

Australia productivity vs ULC y/y%

Source: MNI - Market News/ABS

• Unit labour costs rose 0.8% q/q in Q1 with annual growth moderating 0.1pp to 3.2% y/y, the lowest since Covid-impacted Q1 2021. With wages to rise 4.75% for around 21% of the workforce on 1 July, ULC trends in H2 are likely to be watched closely especially for any indirect effects from the Fair Work Commission decision.
• In terms of inflation risks, weak productivity makes it more important that 4.75% doesn’t become a benchmark for wage demands. Q1 productivity fell 0.6% q/q to be up only 0.3% y/y after Q4’s flat & +1.0% outcomes. The 1.0% q/q rise in hours worked after Q4’s 0.9%, driven by the market sector, is pressuring productivity with output not keeping up.
• The easing in average compensation in Q1 is helpful for the inflation outlook. It rose 0.6% q/q in Q1, the lowest rise since Q3 2024, bringing annual growth to 4.3% from 4.9%, but still above Q2 2025.
• GDP IPD moderated 0.7pp to 2.4% y/y, but still above Q1 2025’s 2.2%. Private consumption inflation has been hovering above the top of the 2-3% band for three quarters with Q1 0.1pp lower at 3.1% y/y. However, it remains above pre-Covid rates.

Australia household consumption IPD %

Source: MNI - Market News/ABS

Below is a selection of key recent onshore media highlights for China ICYMI :

Nvidia (China Daily): Partnership highlights nation's growing AI strength

https://www.chinadaily.com.cn/a/202606/03/WS6a1f6770a310d6866eb4c18b.html

Government Debt (China Daily): 100 trln yuan govt debt seen as controllable

https://www.chinadaily.com.cn/a/202606/03/WS6a1f843ba310d6866eb4c289.html

Energy Infrastructure (China Daily): Private companies eye larger role in strategic energy

https://www.chinadaily.com.cn/a/202606/03/WS6a1f8587a310d6866eb4c2a1.html

Agriculture (China Securities Daily): 15th Five-Year Plan for Accelerating Agricultural and Rural Modernization

https://www.cs.com.cn/xwzx/01/2026/06/03/detail_2026060310015722.html

Capital Markets (China Securities Daily): Accelerating the launch of liquefied natural gas futures and options

https://www.cs.com.cn/xwzx/01/2026/06/03/detail_2026060310015723.html

China UK Relations (Global TImes): China hopes for sound atmosphere to boost China-UK ties, deepen cooperation: Chinese FM

https://www.globaltimes.cn/page/202606/1362617.shtml

Inflation (Global Times): Is falling pork prices a sign that Chinese consumers are 'reluctant to spend money on meat'?: Global Times editorial

https://www.globaltimes.cn/page/202606/1362592.shtml

Technology (SCMP): How a WeChat mini-program is helping China fine-tune drone regulation

https://www.scmp.com/economy/china-economy/article/3355682/how-mini-program-helping-china-fine-tune-drone-regulation?module=top_story&pgtype=section

Tariffs (SCMP): Australian beef will soon be hit by 55% tariff in China, ministry say

https://www.scmp.com/economy/china-economy/article/3355698/australian-beef-will-soon-be-hit-55-tariff-china-ministry-says?module=top_story&pgtype=section

Economic Activity (Xinhua): Chinese seaport cities see soaring port economy output in 2025

https://english.news.cn/20260602/c81cf793ea2c4803a65968badde53f19/c.html

Energy Markets (Xinhua): China striving to become energy powerhouse with green, innovation, secure supply

https://english.news.cn/20260602/fc01a2ec882a42cd9e7f851a9140f688/c.html

New home sales in first-tier cities increased by 10% year-on-year in May, growing for two consecutive months, basically entering the bottoming-out phase, Securities Daily reported citing data by China Index Academy. Beijing, Shanghai, Guangzhou, and Shenzhen saw year-on-year growth of 15%, 2%, 7%, and 50%, respectively. With the mid-year sales period approaching, new home sales in core cities may continue with moderate recovery amid accelerated new project launches and promotion efforts by developers, the daily said citing analysts.