Australian Dollar Steady After Worst Wage Growth Print on Record
- Aussie Dollar steady after lowest Wage Price Index print on record
- Wage inflation of 2.2% in 4Q vs 2.3% forecast and 2.3% in 3Q
- Currency’s tepid reaction may indicate limited impact on markets’ deflated RBA outlook
The AUD/USD exchange rate was sedate Wednesday morning despite Australia reporting particularly weak fourth quarter economic data. The quarterly Wage Price index grew 0.5 percent, more restrained than forecast and prior reading of 0.6 percent. The year-on-year gauge ticked further down to a 2.2 percent growth pace from the estimate and third quarter figure of 2.3 percent. This was the lowest reading on record.
Released at the same time, Australia’s construction industry had also soured the economic outlook with its 4Q update. According to the release, the once-booming sector reported its steepest contraction since December 2000 with a slump of -3.6 percent – more intense than the -2 percent pace of decline expected and the revised prior of -1.8 percent.
Despite implication to economic activity and monetary policy, the Australian Dollar was little moved by the data. The currency’s restrained reaction may be due to traders’ speculation that the data will not significantly alter the RBA already-sedate monetary policy stance. According to overnight index swaps, the financial markets are pricing in a 6 percent chance the central bank will cut interest rates at its March 1st meeting.
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