RBA: Wage growth likely to remain low for a while

Omkar Godbole FXStreet Contributor

The Reserve Bank of Australia (RBA) is expecting a gradual decline in unemployment to 5 percent over the next couple of years, according to the October policy statement. However, the central bank does not see the labor market tightening translating into wage price inflation for a while.

Key points (Source: Reuters)

Low rates supporting economy
Progress on unemployment, inflation expected to be gradual
GDP growth to average a bit above 3 pct in 2018, 2019
Business conditions are positive
Housing markets have slowed in Sydney, Melbourne
Public infrastructure investment supporting economy
Household consumption a source of uncertainty
Outlook for labour market remains positive
Credit conditions tighter than they have been for some time
Expects inflation to be higher in 2019, 2020
Further gradual decline in unemployment expected over the next couple of years to 5 percent
Wage growth remains low, likely to continue for a while
AUD remains in range of past couple of years
AUD has fallen against US dollar, along with most other currencies
Drought has led to difficult conditions in farm sector

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

AUD/USD consolidates above 0.7000 as RBA hike bets support amid softer USD

AUD/USD steadies above 0.7000 in Friday’s Asian session, stalling the overnight pullback from a one-month top as RBA rate-hike expectations act as a tailwind for the Aussie. Moreover, the US Dollar remains on the back foot amid hopes of Iran diplomacy, further supporting the currency pair. However, geopolitical risks and hawkish Fed expectations limit USD losses.

USD/JPY weakens below 157.50 after BoJ keeps rates unchanged

USD/JPY drifts lower for the third straight day, sliding below mid-157.00s during Friday’s Asian session after the widely expected BoJ on-hold rate decision. Meanwhile, the US Dollar selling remains unabated amid hopes for Middle East diplomacy. Moreover, declining US bond yields narrow the US-Japan yield differential, benefiting the Japanese Yen and weighing on the currency pair.

Gold falls to near $4,000 as US PCE data reinforces December Fed hike odds

Gold price falls to around $4,015 during the early Asian session on Friday. The precious metal loses ground as US inflation data reinforced expectations ‌of a Federal Reserve interest rate hike later this year.

Can Bitcoin rally if the Federal Reserve keeps rates higher for longer?

The US Federal Reserve raising interest rates in September after a three-year gap to control alarming inflation numbers renews the fear of reduced liquidity weighing on Bitcoin, similar to the 2022 bear market.

The hawkish Fed can't lift the US Dollar anymore

About three more Federal Reserve hikes are already priced in, and the central banks behind the Euro, Pound, Yen and Loonie are raising rates or about to. That leaves the US Dollar Index with little to gain if the Fed keeps leaning toward higher rates.

A hot US economy is supposed to sink Gold. It didn't. Here's why

Gold (XAU/USD) remains under pressure near $4,000, as stronger-than-expected United States (US) economic data reinforce expectations of another Federal Reserve (Fed) interest rate hike in December. Economic growth is accelerating, inflation remains elevated, and borrowing costs could rise further.