- Australian quarterly and yearly wage growth data underperformed analyst expectations
- The Australian Dollar fell against all of its major counterparts by more than 0.5 percent
- Traders probably saw the data as having dovish implications for RBA monetary policy
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The Australian Dollar lost more than half of a percent against its major counterparts following the release of wage growth data that fell short of analysts’ expectations. Wages grew 0.5 percent from the previous quarter versus 0.7 percent expected. They rose 2 percent from this time last year, below the 2.2 percent forecast.
The Australian Dollar fell alongside local bond yields following the release, hinting markets read it as having dovish implications for monetary policy. Wage growth is an important input for overall inflation, which is the guiding objective for the RBA. The central bank targets medium-term price growth in the 2-3 percent rage.
As it stands, the markets expect the next RBA rate move to be a hike but don’t see that happening at least until September 2018, according to the priced-in outlook implied in OIS rates. That is a Aussie-negative change from a week ago, when markets projected that tightening might start in August.