6thFebruary 2024
Tuesday
On February 6th, key financialupdates are set to be announced by Australia and New Zealand, drawingsignificant attention from investors and market analysts globally. Australia isscheduled to reveal its Cash Rate decision, a critical indicator of thecountry's monetary policy stance and economic health. Simultaneously, NewZealand will disclose its Employment Change for the quarter and the currentUnemployment Rate, providing valuable insights into the nation's labor marketconditions and overall economic vitality. These announcements are eagerlyanticipated, as they have the potential to influence financial markets andeconomic strategies in both countries and beyond.
AUD - Cash Rate
Traders primarily focus on short-term interest rates as the key determinant of currency value, considering other economic indicators largely in terms of their potential impact on future rate adjustments.
At its final meeting of the year, the Reserve Bank of Australia had maintained the cash rate at 4.35%, a move that had been anticipated by the markets. This pause had provided Governor Michele Bullock and her colleagues the opportunity to assess the impact of previous rate hikes. Bullock had recently highlighted that inflation was being driven by domestic demand, marking a shift from earlier supply-driven inflationary pressures. The central bank had noted the challenging pace of bringing inflation within the 2-3% target range, with underlying inflation, especially in services, surpassing expectations. Future rate decisions were to be guided by new data and risk evaluations, as stated by the bank's officials. They also stressed the importance of keeping an eye on global economic developments, trends in domestic demand, and projections for inflation and employment. The rate for Exchange Settlement balances was kept unchanged at 4.25%.
TL;DR
Item
Detail
1 Final Meeting Decision
Maintained the cash rate at 4.35%
2 Anticipation
Move was anticipated by the markets
3 Governor
Michele Bullock
4 Purpose of Pause
To assess the impact of previous rate hikes
5 Inflation Drivers
Shift from supply-driven to being driven by domestic demand
6 Inflation Target Range
Challenging to bring inflation within 2-3%
7 Underlying Inflation
Especially in services, surpassing expectations
8 Guidance for Future Decisions
To be based on new data and risk evaluations
9 Key Areas of Focus
Global economic developments, trends in domestic demand, projections for inflation and employment
10 Exchange Settlement Balances Rate
Unchanged at 4.25%
The forecast for the Reserve Bank of Australia's interestrate decision remains steady at 4.35%, in line with the previous result.
The next Cash Rate announcement is set to be published on February 6th at 3:30 AM GMT.
The last time, the Australian Cash Rate was announced on the 5th of December, 2023. You may find the market reaction chart (AUDUSD M5) below:
NZD -Employment Change q/q
Despite the delayed publication, this data emerges as a key early signal of employment trends and frequently exerts a profound impact on market dynamics. The generation of jobs is a vital precursor to consumer expenditure, which constitutes a substantial portion of overall economic performance.
In a surprising shift, New Zealand's employment figures for September 2023 showed a decrease of 0.20%, deviating from the 1% growth observed in the preceding quarter. Historically, New Zealand's average employment change has hovered around 0.39%. The peak of this trend was seen in the second quarter of 2016 with a remarkable 2.60% increase, while the most significant dip occurred in the first quarter of 2009, with employment decreasing by 1.80%.
TL;DR
Aspect
Detail
1 September 2023 Employment Change
Decrease of 0.20%
2 Previous Quarter Growth
1% growth observed
3 Historical Average Change
Around 0.39%
4 Historical Peak
2.60% increase in Q2 2016
5 Significant Historical Dip
1.80% decrease in Q1 2009
The forecast suggests a minor decline to -0.3% from the previous -0.2% result.
The upcoming Employment Changeq/q report is scheduled to be published on February 6th at9:45 PM GMT.
The last time, the New Zealand Employment Change q/q data was announced on the 31st of October, 2023. You may find the market reaction chart (NZDJPY M5) below:
NZD -Unemployment Rate
Despite typically being seen as a delayed measure, the unemployment rate is a critical indicator of the economy's overall condition, as consumer spending closely aligns with the state of the job market.
In the September quarter of 2023, New Zealand experienced a rise in its unemployment rate to 3.9%, marking the highest level since the June quarter of 2021, from the previous quarter's 3.6%, aligning with market forecasts. Concurrently, the underutilization rate escalated to 10.4%, an increase from 9.9% in the preceding quarter and 8.9% year-over-year. The labor force participation rate slightly declined to 72%, down from a peak of 72.4% in the prior quarter, the highest since 1986, while the employment rate decreased to 69.1% from a series high of 69.8% in the previous quarter, yet remains significantly high since records began in 1986.
TL;DR
Statistic
Q3 2023
Previous Quarter
Historical Context
1 Unemployment Rate
3.9%
3.6%
Highest since Q2 2021
2 Underutilization Rate
10.4%
9.9%
Increased from previous quarter and year-over-year
3 Labor Force Participation Rate
72%
72.4%
Slight decline from peak, highest since 1986
4 Employment Rate
69.1%
69.8%
Decrease from series high, remains high since 1986
The Unemployment Rate forecast suggests a slight increase to 4% from the previous outcome of3.9%.
The upcoming release of the UnemploymentRate data is scheduled for February 6th at 9:45 PM GMT.
The last time, the New ZealandUnemployment Rate data was announced on the 31st of October, 2023. You may find the market reaction chart (NZDJPY M5) below:
