RBA Minutes Flag Hike Risk; Confidence Slumps

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RBA Minutes Flag Hike Risk; Confidence Slumps

-13 NAB Business Confidence

ASX 2008,727.90-0.64%

NZX 5013,760.39+0.08%

AUD/USD0.70+0.26%

NZD/USD0.56+0.10%

Market Snapshot

Asset	Level	Change
ASX 200	8,727.90	-0.64%
NZX 50	13,760.39	+0.08%
AUD/USD	0.70	+0.26%
NZD/USD	0.56	+0.10%
AUD/NZD	1.25	+0.14%
BHP	60.86	-0.69%
Gold	4,123.10	-1.30%
Brent Crude	105.99	+0.28%
Bitcoin	81,794.72	-1.56%
Australia 2Y Govt Yield	4.94%	+1 bp
Australia 10Y Govt Yield	5.40%	+1 bp

Prior Economic Events

Data	Prior	Cons	Actual
NAB Business Confidence Index	-8	-	-13
RBA Meeting Minutes	-	-	-

Today's Economic Events

Data	Prior	Cons	Time
Employment Change	39,500	20,000	20:30
Full-Time Employment Change	-6,300	-	20:30
Headline Unemployment Rate	4.60	4.60	20:30
Business NZ PMI	53.10	-	17:30
Trade Balance	-1,349m	-	17:45

Australian NAB business confidence slumped to -13 in September from -8, extending a run of weak sentiment readings and underscoring the squeeze from still-restrictive policy.
RBA meeting minutes struck a hawkish tone, flagging possible future hikes if inflation proves sticky, keeping the AUD supported near 0.70.
Australian labour data dominates today's calendar, with consensus looking for 20,000 jobs added and the unemployment rate steady at 4.6%.

Yesterday's Recap

Australian markets closed lower, with the ASX 200 shedding 0.64% to 8,727.90 as mining heavyweight BHP slipped 0.69% to 60.86, while the NZX 50 edged up 0.08% to 13,760.39. The key Australian data print was the NAB business confidence index, which deteriorated to -13 from -8 previously, a high-impact release that reinforced concerns about the health of corporate sentiment under restrictive monetary conditions. The RBA meeting minutes were also published, and press coverage characterised the message as hawkish, with the central bank signalling possible future rate hikes if required to return inflation to target.

In FX, the AUD firmed 0.26% to 0.70 against a softer US dollar, with the hawkish RBA commentary cited as a supporting factor, while the NZD gained a more modest 0.10% to 0.56. AUD/NZD rose 0.14% to 1.25. Australian government bond yields ticked higher, with the 2-year up 1 bp to 4.94% and the 10-year up 1 bp to 5.40%, a modest steepening in a quiet session.

Elsewhere, gold fell 1.30% to 4,123.10 and Brent crude added 0.28% to 105.99, while Bitcoin dropped 1.56% to 81,794.72.

The Day Ahead

Today's Australian labour market report is the highlight, with employment change expected to slow to 20,000 from the prior 39,500 gain, and full-time employment watched closely after last month's 6,300 contraction. The headline unemployment rate is forecast to hold at 4.6%, and any deviation will shape expectations for the RBA's next move given the bank's stated data dependence. The composition of the print matters as much as the headline, with full-time hiring a better gauge of underlying labour demand.

Overnight into tomorrow, New Zealand's Business NZ PMI is due, with the prior reading at 53.1; a softer result would add to evidence of sluggish activity across the Tasman. Later in the week, New Zealand's trade balance is scheduled, following a prior deficit of 1.349 billion. Attention will also turn to how the labour data feeds into wage pressure dynamics, a key input for the RBA's inflation outlook.

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Other Economic Notes

Australia's productivity performance is back in focus, with economists warning that weak multifactor productivity is fuelling domestic inflation pressures and complicating the RBA's task. The structural implication is that unit labour costs rise faster than they would in a more efficient economy, forcing the central bank to lean harder on demand. Electric vehicles are emerging as one practical disinflationary channel, with fleet adoption lowering household transport costs at the margin.

On the trade side, Rio Tinto argued that elevated oil prices actually advantage Australian miners, since rivals with longer shipping routes are curbing production while Australia's geographic proximity to Asian buyers lowers freight intensity. That dynamic supports the terms of trade but also illustrates how energy shocks redistribute competitiveness across the global mining sector.

Global Macro News

The US dollar's trajectory remains the dominant swing factor for antipodean currencies, and its recent softness has provided a tailwind for both the AUD and NZD. In Asia, Singapore held monetary policy as the economy expanded a robust 5.4%, with AI-driven demand cited as a key driver — a reminder that regional growth pockets remain resilient even as China's recovery stays uneven. Japan is navigating its own policy inflection, with dollar-yen turning jittery on Bank of Japan reports and briefly sliding to 157.83 before the dollar's inflation-driven surge reasserted itself, leaving the yen near September lows.

Hong Kong's peg is under mild strain, with the local dollar nearing the weak end of its trading band and HKMA intervention looming. ↓ p.3

Continuation

Global Macro News (continued)

In commodities, Brent crude's grind higher near 106 reflects persistent supply discipline, a mixed blessing for Australia's exporters and a direct cost for New Zealand's import-heavy tourism sector. Gold's pullback to around 4,123 suggests some rotation out of havens as risk appetite stabilises. Bitcoin's slide below 82,000 points to softer speculative appetite.

For ANZ assets, the China trade relationship remains the single largest external variable, and any friction in that channel would hit Australian bulk commodities hardest.

ANZ Central Banks Watch

The RBA's minutes were the key policy event, and the tone was unambiguously hawkish, with the board signalling openness to further hikes if inflation persistence warrants. With the cash rate at 4.35%, the bank appears comfortable holding but wants optionality preserved in both directions. Today's labour report is therefore pivotal: a sub-20,000 print or a rise in the 4.6% unemployment rate would ease pressure for tightening, while strength would validate the hawkish rhetoric.

The productivity debate adds a structural layer, since weak supply-side performance means demand restraint must do more of the disinflationary work. Across the Tasman, the RBNZ's official cash rate sits at just 2.75%, a dramatically different starting point from the RBA, and commentary suggests the bank may need to hike merely to defend the currency's external value. That divergence — RBA on hold at restrictive levels versus an RBNZ potentially pivoting from stimulative settings — is the defining feature of the trans-Tasman rate cycle.

New Zealand CPI at 4.1% year-on-year versus Australia's 4.0% shows both banks face similar inflation problems with very different policy stances, setting up AUD/NZD as a policy-divergence trade. Housing market sensitivity will shape both banks' calculus, given the outsized role mortgages play in transmission in both economies.

ANZ Macro Daily(Beta Mode)