AUD/USD turns a blind eye toward weak Aussie wage price inflation

• AUD/USD sees little action even though key Aussie data missed estimates. 
• The wage price index declined to 0.2% in the second quarter. 
• Risk-on is likely helping the AUD avoid losses. 
• Big gains look unlikely as US yields are rising. 

AUD/USD remains sidelined near 0.7145 following the release of the dismal Aussie wage-price inflation data. 

Wage price index, an indicator of labor cost inflation and of tightness in the labor market, rose 0.2% quarter-on-quarter in the April to June period, missing expectations for 0.3% rise following the first quarter’s 0.5% increase. 

The decline in wage-price inflation validates the Reserve Bank of Australia's dovish stance. The central bank’s recently released quarterly statement of monetary policy revealed that policymakers expect wage growth to remain subdued for some time. As such, household spending is likely to remain anemic. 

Even so, the AUD bears are staying on the sidelines, as the broader market sentiment has turned positive in the last 24 hours, courtesy of the positive coronavirus vaccine news, renewed hopes for an additional fiscal stimulus, and signs of stabilization in the virus cases in Australia’s Victoria state. 

However, big gains may remain elusive, as US yields are rising in the USD-positive manner. Notably, the 10-year yield jumped by most in over two months on Tuesday as investors sold bonds in anticipation of a surge in debt issuance by the US government and American corporations. A record $38 billion bond auction is due on Wednesday. 

In addition, gold, one of Australia’s top exports, fell by most in seven years on Tuesday, having recently rallied to a record high of $2,081. Also, the Reserve Bank of Australia is reportedly planning to boost the size of its bond purchases on Wednesday as a part of its yield curve control program. 

Technical levels