RBA Tightens Further as NZ Labour Market Cracks

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RBA Tightens Further as NZ Labour Market Cracks

4.85 RBA Interest Rate Decision-0.10 Employment Change5.70 Headline Unemployment Rate-19.10 Ai Group Industry2,826m Trade Balance

ASX 2009,020.80-0.49%

NZX 5013,998.50+0.61%

AUD/USD0.69-0.83%

NZD/USD0.56-0.62%

Market Snapshot

Asset	Level	Change
ASX 200	9,020.80	-0.49%
NZX 50	13,998.50	+0.61%
AUD/USD	0.69	-0.83%
NZD/USD	0.56	-0.62%
AUD/NZD	1.23	-0.43%
BHP	57.62	-2.34%
Gold	4,074.90	-0.94%
Brent Crude	98.32	+0.03%
Bitcoin	75,807.11	+0.08%
Australia 2Y Govt Yield	4.83%	0 bp
Australia 10Y Govt Yield	5.08%	-1 bp

Prior Economic Events

Data	Prior	Cons	Actual
RBA Interest Rate Decision	4.60	4.85	4.85
RBA Monetary Policy Statement	-	-	-
RBA Rate Statement	-	-	-
RBA Press Conference	-	-	-
Employment Change Quarter-over-Quarter	0.50	0.40	-0.10
Headline Unemployment Rate	5.60	5.50	5.70
Ai Group Industry Index	-24.20	-	-19.10
Trade Balance	184m	800m	2,826m

Mortgage Lending Rate (New Borrowers, 1Y Fixed)

Today's Economic Events

Data	Prior	Cons	Time
RBA Hunter Speech	-	-	17:30

RBA raised the cash rate to 4.85% at its November 3 decision, with reporting suggesting a finely balanced vote and markets debating a possible December pause
New Zealand's labour market deteriorated sharply, with employment contracting 0.1% q/q and unemployment rising to 5.7%
AUD/USD fell 0.83% to 0.69 and NZD/USD dropped 0.62% to 0.56 as the kiwi remains under pressure amid NZ election uncertainty

Yesterday's Recap

The Reserve Bank of Australia raised the cash rate to 4.85% at its November 3 meeting as the Board continues its fight against inflation running at 3.90% y/y. The accompanying monetary policy statement and press conference reinforced the RBA's hawkish stance, though reporting suggests the decision was finely balanced, raising the prospect of a pause at the December 8 meeting. In New Zealand, the labour market data released November 3 painted a deteriorating picture: employment change contracted 0.1% q/q against consensus of 0.4%, while the headline unemployment rate rose to 5.7% versus expectations of 5.5%.

Australia's Ai Group Industry Index improved to -19.1 from -24.2 previously, though it remains deep in contraction territory. The Australian trade balance printed at A$2.826 billion, comfortably beating consensus of A$800 million and the prior A$184 million, reflecting resilient commodity export flows. Equity markets diverged, with the ASX 200 falling 0.49% to 9,020.80 while the NZX 50 gained 0.61% to 13,998.50.

BHP dropped 2.34% to A$57.62, weighing on the Australian index, while the Australian 10-year yield eased 1 bp to 5.08% and the 2-year held at 4.83%.

The Day Ahead

The calendar is light, with the sole scheduled event being RBA Deputy Governor Hunter's speech at 17:30 ET. Markets will parse his remarks for any signal on the December 8 decision, particularly given the closeness of the November hike and the RBA's repeated emphasis on data dependence. With no Australian or New Zealand data releases scheduled, attention shifts to offshore drivers, particularly US dollar dynamics and any China-related developments.

The speech carries elevated importance as the last scheduled RBA communication before the December meeting, and any deviation from the November statement's tone could move AUD and front-end yields.

Other Economic Notes

Australia's housing market is showing pronounced weakness, with the WSJ noting the slump is deepening as the RBA prepares for further tightening — a dynamic that complicates the transmission of monetary policy given household leverage. ↓ p.2

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Mortgage Lending Rate (Floating/Variable)

Other Economic Notes (continued)

Bank earnings have offered conflicting signals on borrower health, with one major lender increasing loss provisions while another held steady, suggesting uneven stress across the mortgage book. The "wealth effect" is reversing at the fastest pace in four decades, with estimates of a trillion-dollar downside as property values decline, which could weigh on consumption. Separately, budget strategy faces pressure as the RBA's outlook warns against sharp spending cuts that could compound the demand slowdown, while Prime Minister Albanese has defended his inflation record and signalled openness to expenditure restraint.

Global Macro News

New Zealand's general election has produced a knife-edge result, with the incumbent National Party holding a wafer-thin majority and Prime Minister Luxon clinging to power as late ballots are tallied — weeks of uncertainty lie ahead, with the outcome hinging on cost-of-living solutions. The NZD/USD has been falling post-election, with forecasters debating whether the kiwi's decline extends further given the political vacuum and weak domestic data. The US dollar rose sharply against most majors, contributing to AUD and NZD weakness.

The Bank of England made a timely intervention on Brexit-related matters, though the broader G10 tone remains dollar-supportive. In Asia, BofA recommends buying dips in the Korean won and Taiwan dollar, suggesting regional FX views are diverging from the antipodean underperformance. Gold fell 0.94% to US$4,074.90/oz while Brent crude was essentially flat at US$98.32/bbl, offering little commodity support for the AUD.

Continuation

ANZ Central Banks Watch

The RBA's November 3 decision lifted the cash rate to 4.85%, with the Board signalling that inflation at 3.90% remains too high and further tightening may be required, though the closeness of the decision has introduced genuine two-way risk for December 8. Deputy Governor Hunter's speech today is the key near-term communication event, and any softening in language would see markets price a higher probability of a pause. The RBNZ, by contrast, has been on hold since its September 2 decision set the OCR at 2.75%, with the most recent October 28 meeting confirming a hold; its next decision is December 9.

The divergence is stark: Australia is still tightening at 4.85% while New Zealand sits at 2.75% with a deteriorating labour market — unemployment at 5.7% and employment contracting — which argues against any near-term RBNZ tightening. New Zealand's housing and construction sectors remain fragile, and the election uncertainty adds a layer of caution to the RBNZ's outlook. The RBNZ also charged Westpac over a disclosure breach, a reminder of heightened regulatory scrutiny in the NZ financial sector.

ANZ Macro Daily(Beta Mode)