Australia: Wages will be the focus - Westpac

In view of Sean Callow, Research Analyst at Westpac, wages will be the focus for Australian economy as RBA’s Ellis said this week that, “Our forecasts are for wage growth to pick up from here, but not immediately and then only gradually.”

Key Quotes

“So another very subdued 2.0%yr (consensus) would not be a game changer. The lack of volatility in the WPI does mean markets will place significance on any deviation from 2.0%.”

“Australia’s commodity price basket has been roughly stable since late Jan so we can’t blame A$ swings on commodities. Lunar new year will mean even less short term guidance on this front.”

“Instead AUD/USD looks set to follow the broad USD trend, as a high beta antiUSD play. Price action in recent sessions points to extension of the AUD/USD rebound off the 100 & 200dmas around 0.7770. Scope for 0.8000/50 if the greenback stays weak.”