New Zealand’s Q2 unemployment rate is 5.2%, performing slightly better than expected, but wage growth remains slow.
by VT Markets
/
Aug 6, 2025
**New Tax Legislation**
According to the jobs report from August 5, 2025, the New Zealand economy is slowing down. The unemployment rate reached 5.2%, the highest since late 2020. This confirms what the Reserve Bank of New Zealand (RBNZ) has been warning. It’s now highly likely that the RBNZ will cut interest rates at the meeting on August 20.
This report aligns with other recent data, like last month’s Q2 Consumer Price Index (CPI), which showed inflation dropping to 2.8%. Even though this is above the RBNZ’s target, the downward trend allows them to take action. The Official Cash Rate (OCR) has been held at a tight 5.50% for over a year, and this jobs report is the final piece confirming a policy change.
**Market Positioning for Traders**
For traders, this suggests that the New Zealand dollar may weaken. We’re thinking about buying NZD/USD put options that will expire after the August 20 RBNZ meeting to benefit from a possible drop. Using bear put spreads could be a smart way to lower our entry costs, especially since volatility might rise before the announcement.
In the interest rate markets, we should prepare for lower yields. We’re looking at New Zealand short-term interest rate futures, which should increase in price as the central bank starts its easing cycle. Weak wage growth of only 2.2% year-on-year strengthens our belief that the RBNZ needs to act.
However, we must remain cautious, as the market already expects a 25-basis-point rate cut. The biggest risk to our bearish NZD position is if the RBNZ surprises us by keeping rates steady, which would likely cause a rapid increase in the currency’s value. Therefore, we should manage our positions with clear stop-loss levels.
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by VT Markets
Aug 6, 2025
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