On Monday, the Australian dollar began the week in positive territory, and AUD/USD traded at about 0.6596, up 0.41% for the day in the European session.
The Australian dollar has managed to recover from the recent turmoil that has routed stock markets globally. the Australian dollar dropped as much as 2.4% last Monday but managed to trim most of the losses. As the markets steadied, the risk-prone Aussie has risen by 1.5%.
There is however still uneasiness in the markets and if sentiment falls, the Australian dollar may head down.
Australia will release the wage price index for Q2 on Tuesday. The market estimate is at 0.9% q/q, versus 0.8% in Q1. Wage growth will likely tick lower to 4.0% annually, compared to 4.1% in the first quarter. The RBA will evaluate the data carefully, as it is still worried about a price-wage spiral.
Last week, the Reserve Bank of Australia kept rates at 4.35% but stayed hawkish. Governor Bullock said that she didn’t expect to cut rates for the next 6 months. Bullock said that policymakers had discussed a rate hike due to worries about inflation remaining high persistently.
The RBA may become an outlier among major central banks, which have already cut rates or like the Fed, have indicated that rate cuts will be coming soon.
