USD to AUD Rate at 0.66 After the Australian Wage Price Index

The USD to AUD rate was showing stability ahead of important economic data from Australia and the US, with AUD/USD consolidating below 0.66.

Skerdian Meta•Tuesday, August 13, 2024•2 min read

The USD to AUD rate was showing some stability ahead of important economic data from Australia and the US, with AUD/USD consolidating below 0.66. This pair showed volatility in July, falling 4.5 cents, but then reversing and climbing 2.5 cents higher, retesting the bottom of the previous range at 0.66 where the 100 daily SMA stands.

Australia Q2 Wage Price Index

Due to China’s economic slowdown in 2024, the Australian dollar which is a risk currency, saw some increased weakness throughout July. Despite this, the Reserve Bank of Australia (RBA) has maintained a hawkish stance. This was evident in last week’s policy meeting, where Governor Bowman mentioned that the board had not discussed lowering interest rates, providing some support to the AUD/USD . Last week, the AUD/USD saw some gains, but a battle between buyers and sellers ensued as the pair approached the 100-day moving average at 0.66.

AUD/USD Chart Daily – Retesting the 100 SMA

This tug-of-war left the price in a tight range below the 100-day moving average above at 0.66. The price continued to test the lower moving average of the previous range, returning to this area after some fluctuation. Earlier this morning, the Australian Wage Price Index for Q2 was released, with expectations for a slight increase from 0.8% to 0.9% in Q2. However, the year-over-year Wage Price Index was projected to decline slightly to 4.0% from 4.1% previously. The RBA noted that while wage growth appears to have peaked, it remains above the level consistent with their inflation target.

Australia Q2 Wage Price Index

Quarterly Wage Growth: The Q2 Wage Price Index increased by +0.8%, slightly below market expectations of +0.9%. This matches the Q1 growth rate of +0.8%.
Annual Wage Growth: On a year-over-year basis, the Wage Price Index rose by +4.1%, which aligns with the previous quarter’s figure but is slightly above the anticipated +4.0%.

These slightly cooler-than-expected numbers suggest that wage pressures may be stabilizing, which could influence the Reserve Bank of Australia’s (RBA) monetary policy decisions. The market is now leaning more heavily towards the likelihood of a rate cut by December, with this expectation nearly fully priced in. The moderation in wage growth could be a sign that inflationary pressures are easing, potentially allowing the RBA to adopt a more accommodative stance as it seeks to balance economic growth and inflation control.

AUD/USD Live Chart

AUD/USD

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.