New Zealand employment expected to decline, US ISM Services PMI

[Ben Graham]

The New Zealand dollar has edged lower on Tuesday. In the North American session, NZD/USD is trading at 0.5892, down 0.27% on the day.

New Zealand employment expected at -0.1%

New Zealand releases the employment report for the second quarter on Wednesday, with the markets braced for worsening data for the labor market. Employment change is expected to contract by 0.1%, down from a 0.1% gain in Q1. The unemployment rate, which was unchanged at Q1 at 5.1%, is expected to rise to 5.3% in Q2, which would be the highest rate since Q3 2020.

The New Zealand economy sustained a recession last year and the labor market has softened. Global demand for New Zealand exports has fallen as trade tensions remain high due US trade policy. The softening labor market and weak global conditions have raised the downside risk to inflation, which supports the case for the Reserve Bank of New Zealand to lower rates on Aug. 20.

The Reserve Bank has been aggressive in the current easing cycle, cutting rates by 225 points in just 12 months, to a current cash rate of 3.25%. Bank policymakers will be keeping a close eye on Thursday's inflation expectations, which accelerated to 2.3% in the second quarter. The release shouldn't complicate the RBNZ's plan to cut rates at the next meeting, providing that inflation expectations do not rise significantly.

US ISM Services PMI expected to improve

The ISM services PMI is expected to accelerate to 51.5 in July, compared to 50.8 in June. The services sector is back in expansion territory after a rare contraction (49.9) in May. Services purchase managers pointed to the uncertainty over tariff impacts as their number one concern.

NZD/USD Technical

• NZD/USD is testing support at 0.5894. Below, there is support at 0.5881
• 0.5913 and 0.5926 are the next resistance lines

NZDUSD 1-Day Chart, Aug. 4, 2025

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