The AUDUSD pair declined slightly as the market reacted to the disappointing wage price index data from Australia. The pair is trading at 0.7113, which is below this month’s high of 0.7256.
According to the Australian Bureau of Statistics (ABS), wages rose by 0.2% in the second quarter and by 1.8% from January to June. This increase was the lowest pace of growth since the bureau started recording the number 22 years ago. Analysts were expecting the wages would increase by 0.3% and 1.9%, respectively.
The lower wages were expected, considering that Australia is going through its worst economic crisis in decades. The rate of unemployment has increased and more companies are going through a tough period.
The wage increase was mostly because of the public sector, where the wages rose by 0.4%. In the private sector, the wages declined by 0.1%, the first decline ever recorded. This decline was mostly because of the large number of wage reductions across the senior executive and higher paying jobs. In a statement, Andrew Tomadini, the head of price statistics at the bureau said:
“After a steady period of wage growth over the previous 12 months, wages recorded the lowest annual growth in the 22-year history of the WPI.”
The AUDUSD pair will next react to the employment numbers that will come out tomorrow. Analysts polled by Reuters expect that the Australian economy added more than 40,000 jobs in July after adding 210K in the previous month. They also expect the participation rate will increase to 64.4% while the unemployment rate will increase to 7.8% from the previous 7.4%.
The AUDUSD pair has also been under pressure because of the rising number of coronavirus cases in Australia. Data from the health agency showed that the country confirmed more than 300 new infections yesterday.
AUDUSD technical outlook
The AUDUSD pair is trading at 0.7113, which is lower than the multi-month high of 0.7256. The daily chart shows that the pair has been in the red in the past four consecutive days. Also, the pair has moved below the lower side of the ascending wedge pattern. It is also above the 50-day and 100-day exponential moving averages.
Therefore, I suspect that the pair will remain in a downward trend as bears attempt to test the next support at 0.7000. On the flip side, a re-entry into the rising wedge will invalidate this trend.