The Australian dollar is trading near three-year highs but showed weakness, influenced by recent central bank minutes, strong wage growth data, and anticipation for upcoming economic data releases. Investors are closely watching inflation pressures, labor market tightness, and signals regarding future interest rate hikes by the Reserve Bank of Australia (RBA). The US Dollar’s strength also plays a role, particularly as investors await Federal Reserve policy minutes.
- The Australian dollar edged down to below $0.71.
- Annual wage growth rose 3.4% in the December quarter.
- RBA minutes cited a “material shift” in inflation risks, justifying the recent rate hike to 3.85%.
- Attention now shifts to January jobs data and the Q4 GDP report.
- Economists expect the Australian economy to have created fewer jobs in January.
- The Unemployment Rate is seen higher at 4.2% from the previous reading of 4.1%.
- The RBA hiked its Official Cash Rate (OCR) by 25 basis points (bps) to 3.85%, and kept the room open for further monetary policy tightening.
The Australian dollar’s performance is currently a balancing act. Positive wage growth and signals from the central bank regarding inflation support its value. However, expectations of slowing job creation and a rising unemployment rate could negatively impact its trajectory. The central bank’s future policy decisions will likely be heavily influenced by upcoming jobs data and the GDP report, making these releases crucial for understanding the currency’s potential direction.