AUD/USD Pares Gains After Strong Wage Growth
MarketPulse | Feb 21, 2024 07:29AM ET
The Australian dollar continues to climb and has put together a five-day winning streak. The Aussie rose as much as 0.36% earlier but has pared most of these gains and is currently trading at 0.6552 in the European session, up 0.05%.h2 Wage Price Index Climbs 4.2% in Q4/h2
Australia’s wage price index (WPI) rose 4.2% y/y in the fourth quarter, up from a revised 4.1% gain in the third quarter and above the market estimate of 4.1%. This was the highest reading since Q1 of 2009, as wages rose in both the public and private sectors. Significantly, this was the first time since 2021 that the WPI has exceeded consumer price inflation, which is running at 4.1%.
The rise in annual wage growth grabbed the headlines and gave a boost to the Australian dollar, but on a quarterly basis the numbers paint a different picture. Wages rose 0.9%, easing from the 1.3% gain in the fourth quarter. The decline in wage growth could signal that the robust labor market is showing cracks, which would be a welcome sign for the Reserve Bank of Australia in its campaign to bring inflation back down to the 1 to 3 percent target band.
The markets believe that the RBA’s tightening cycle is over but aren’t expecting interest rates to come down in the near term. Investors have priced in only 38 basis points in cuts in 2024, with an initial cut not expected until August or September. The RBA is unlikely to jump on the rate-cut bandwagon until it is convinced that inflation will continue to fall or the strong labor market shows signs of cooling.
- AUD/USD tested resistance at 0.6570 earlier. Next, there is resistance at 0.6608
- 0.6570 and 0.6608 are providing support
Original Post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.