Australia’s Q2 wage price index due on Wednesday and the July labour force survey on Thursday are expected to leave Reserve Bank of Australia rate expectations largely intact. Wages are forecast to rise 0.8% q/q for a third consecutive quarter, while annual growth is seen easing to 3.2% y/y from 3.3% in Q1. Employment growth is projected at +12k versus +76.3k in June, and the unemployment rate is expected to hold at 4.4% for a third straight month.
RBA Rate Outlook and Market Pricing
Market pricing implies the RBA remains within reach of one further move, but without a fully priced tightening path. RBA cash rate futures indicate 60% odds of a final 25bps increase by year end, which would take the cash rate to 4.60%.
Support for the Australian Dollar
Even so, the AUD continues to draw support from favourable carry conditions and Australia’s commodity exposure tied to energy and sectors linked to AI and defence.
