- In Q2, wages in Australia rose slowly over the year.
- Employment in Australia rose, leading to improved business conditions in July.
- Traders are on edge, awaiting US figures on wholesale and consumer inflation.
AUD/USD price analysis shows a slow uptrend as the Aussie climbs after a flurry of economic reports. However, volatility remained low as investors stayed on the sidelines ahead of US wholesale and consumer inflation reports.
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Australia released reports on Tuesday that showed a mixed picture of the economy. In Q2 earnings grew at the slowest pace of the year. The wage price index increased by 0.8%, missing forecasts by 0.9%. Meanwhile, the annual figure remained stable at 4.1%.
Slower wage growth shows that high interest rates are affecting the economy. Therefore, it sheds light on the Reserve Bank of Australia’s monetary policy. However, policymakers remain hawkish as price pressures remain high. Consequently, there is a chance that the central bank will start cutting rates next year. Still, this step in the right direction could raise expectations for a rate cut.
Meanwhile, a separate report found employment in Australia rose, leading business conditions to improve in July. At the same time, cost pressures have cooled amid high interest rates. The business conditions index rose by two points to +6. The Australian dollar rose slightly before retreating. However, the move was tempered by caution in the face of US inflation data.
Traders are on edge, waiting for figures on wholesale and consumer inflation. Cooler inflationary pressure is likely to increase expectations for a 50 bps Fed rate cut in September. On the other hand, if inflation spikes, there will be a higher chance of a smaller decline of 25 bps.
AUD/USD key events today
AUD/USD Price Technical Analysis: Bullish momentum remains muted
On the technical side, the AUD/USD price is slowly climbing above the 30-SMA. Bulls are showing little enthusiasm as they push prices towards the 0.6700 resistance level. Recently there was a change in sentiment as the price broke above the 30-SMA. This breakout followed a bullish divergence of the RSI.
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However, bulls remained muted, keeping prices close to the 30-SMA. Meanwhile, the RSI is moving sideways and has remained below the overbought region, indicating weak momentum. If this trend continues, the price could reach the critical level of 0.6700. However, bears could emerge to push the price below the 30-SMA.
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