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  • The wage price index increased by 0.7% in Q2, missing the 0.8% forecast.
  • Bets on a 50bps RBA rate hike are going up.
  • In the charts, the price has broken below the 30-SMA.

Today’s AUD/USD price analysis is bearish after wage growth fell short of forecasts. In the most recent quarter, Australian wages grew at their highest rate in over eight years due to the nation’s record-low unemployment rate and a tight labor market. However, pay increases still fell short of expectations and were much slower than inflation.

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According to data released by the Australian Bureau of Statistics on Wednesday, the wage price index (WPI) increased by 0.7% in the June quarter, less than the 0.8% increase that had been anticipated.

The Reserve Bank of Australia (RBA) is concerned that high inflation is bleeding through to pay and price-setting behavior and may gradually tighten monetary policy after wage growth falls short of forecasts.

Markets responded by increasing the probability of a further half-point rate hike by the RBA in September and lowering the local currency by 0.5% to $0.6992.

Since inflation has risen to a 21-year high of 6.1% and is anticipated to exceed 7% in the coming months, markets are betting rates could rise as much as 3.5% by April next year.

Even so, a rebound in wage growth from its all-time low of 1.4% in late 2020 was at least a pleasant development, and all indications point to higher rises in the future.

If inflation in the US has not peaked, then AUD/USD has a significant downside potential.

AUD/USD key events today

Australia is expected to release a jobs report with employment expected to go down from 88.4K to 25.0K and unemployment to hold at 3.5%. Investors will also pay attention to the FOMC meeting minutes for clues on future monetary policy.

AUD/USD technical price analysis: Bulls failed to stay above the 0.71 critical level.

AUD/USD price analysis

Looking at the 4-hour chart, the price was rejected above the 0.71009 level. Bears took charge of the market when the price broke below the 30-SMA. Momentum is favoring bears as the RSI trades below 50.

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The price broke through critical resistance-turned support at 0.70454, and the current trend will likely continue with the next support level at 0.69490.

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