Aussie extends losses, wage inflation next

November 12, 2024 Share Print 0

The Australian dollar has posted sharp losses on Tuesday. In the European session, AUD/USD is trading at 0.6544, down 0.44% on the day.

Australian consumer, business sentiment accelerates

Australian businesses and consumers are showing improved confidence. The National Bank Business Confidence index for October rose to 55, up from -2 in September and its highest level since January 2023. The Westpac consumer confidence index climbed 5.3% to 94.6 in November, up from 89.8 in October. This was the highest level in over two years.

The positive confidence numbers indicate that businesses and consumers are more confident about the economic outlook, as expectations grow for a rate cut from the Reserve Bank of Australia, which meets on Dec. 10. Australia releases the October employment report on Thursday and the release could be a significant factor as to whether the central bank continues to hold rates or delivers an initial rate cut. Australian inflation has fallen to 2.8%, within the RBA’s target of 1% to 3%.

Australia releases wage inflation on Wednesday. Wages are expected to ease to 3.6% y/y in the second quarter, down from 4.1% in Q1. Wage inflation has been a driver of services inflation which rose to 4.5% in the second quarter, up from 4.3% in Q1. RBA policymakers are hesitant to start lowering rates until services inflation loses some steam and heads lower.

In the US, there are no major events on the calendar but investors will be listening closely as a number of FOMC members make public remarks. The Federal Reserve is expected to continue to trim rates, with a 25-basis point cut the most likely scenario at the December meeting.

AUD/USD Technical

AUD/USD has pushed below support at 0.6559 and is testing support at 0.6544. Below, there is support at 0.6524
There is resistance at 0.6579 and 0.6594

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Kenny Fisher

Market Analyst at OANDA

A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.