- Australian wage growth remained stable in the June quarter.
- Yearly pay increases in Australia unexpectedly slowed, raising hopes that inflationary pressures might weaken.
- RBA projections anticipate annual wage growth peaking at 4.1% by the end of the year.
Today’s AUD/USD outlook is bearish. Australian wage growth remained stable in the June quarter. However, the pace of yearly pay increases unexpectedly slowed. This unexpected slowdown raised hopes that inflationary pressures might weaken, providing a case against further interest rate hikes.
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With dovish minutes from the July policy meeting also released, investors are more confident that the Reserve Bank of Australia will hold rates in September. The probability of this outcome has risen to 91% from 85%.
According to data from the Australian Bureau of Statistics, the wage price index showed a 0.8% rise in the June quarter compared to the previous one. Notably, this growth rate was slightly below the anticipated 0.9% increase.
Meanwhile, annual pay growth experienced a slight decline. It moved from a peak of 3.7% in the previous quarter to 3.6% in the current one. Furthermore, this departure marked a shift from the increasing trend observed since the first quarter of 2021.
Despite Australia’s low jobless rate of 3.5%, the economy’s performance in terms of job creation is exceeding expectations. Nevertheless, wages are still not keeping up with inflation, impacting real incomes.
The RBA’s recently released minutes indicated that the bank envisions a scenario in which inflation remains controlled by the current interest rate level. Their projections anticipate annual wage growth peaking at 4.1% by the end of the year and then subsiding to 3.6% by the end of 2025.
AUD/USD key events today
Investors will watch sales data from the US to get an idea of consumer spending in the country. Consumer spending drives the broader economy.
AUD/USD technical outlook: 30-SMA retaining selling pressure
On the charts, AUD/USD is pushing lower after retesting the 30-SMA and the 0.6500 resistance level. The bearish bias is strong because the price respects the 30-SMA resistance. Moreover, the RSI trades below 50, indicating solid bearish momentum.
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Therefore, bears will likely soon retest the nearest support at 0.6450. However, the bearish momentum in the downtrend has weakened. The RSI has made a bullish divergence that could soon reverse the trend.
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