The Australian dollar slipped below $0.71 but held close to a ten-week high as investors digested the Reserve Bank of Australia’s latest guidance alongside softer-than-expected quarterly wage data. Wages continued to rise at a moderate pace for a fifth consecutive quarter in the June period, with annual growth in the private sector slowing to its weakest rate in four years. This softer private-sector wage growth may ease some of the pressure on the RBA to tighten policy further.
Even so, Deputy Governor Andrew Hauser cautioned that the central bank may still need to raise interest rates if upside risks to inflation materialize. He cited the conflict in the Middle East, the global surge in AI-related activity, and sluggish productivity growth as key inflation risks. The RBA left its cash rate unchanged at 4.35% last week, after delivering a total of 75 basis points of rate increases since February to tackle stubborn price pressures.
At the same time, the US dollar remained broadly weaker as markets scaled back expectations of additional Federal Reserve rate hikes, following a run of disappointing US economic data.
