The Australian dollar is steady on Wednesday. In the European session, AUD/USD is trading at 0.6525, down 0.12% on the day.

Australia’s wage inflation within expectations

Wage inflation in Australia eased to 3.5% y/y in the third quarter, down from 4.1% in Q2 and just shy of the market estimate of 3.6%. This was the weakest wage price growth since Q4 2022. Quarterly, wage growth remained at 0.8% in the third quarter, below the market estimate of 0.9%.

The data is in line with the Reserve Bank of Australia’s projection that wage growth has peaked. The central bank expects wages to continue to easing in the fourth quarter and next year, which supports the case for a rate cut. The RBA has insisted that a rate hike remains on the table as underlying inflation is too high. The decline in wage growth is an encouraging sign as high wages have driven services inflation, which remains much higher than the 2% inflation target.

The RBA’s hawkish stance has put it out of sync with other major central banks are lowering rates in response to falling inflation. The markets have priced in another hold in rates at the December meeting, with an initial rate cut likely in the first half of 2025.

Australia releases the October employment report on Thursday. The economy is expected to have added 25 thousand jobs, after a sparkling 64.1 thousand gain in September, most of which was full-time employment. The unemployment rate is expected to remain unchanged at 4.1%.

In the US, Minneapolis Fed President Neel Kashkari said on Wednesday that the US economy is in a “good place” and that monetary policy is currently “modestly restrictive”. Kashkari added that economic data would be the guide as to the Fed’s rate path.

AUD/USD Technical

• There is support at 0.6505 and 0.6475
• 0.6543 and 0.6573 and the next resistance lines

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