Aussie Drop in Asia as Central Bank Record Weak Wage Gains

On Tuesday, the Aussie fell in Asia as the central bank painted a downbeat picture for wage inflation.

Central Bank Record Weak Wage Gains while Aussie in Asia fell.

AUD/USD traded at 0.7539, down 0.15 percent, while USD/JPY changed hands at 112.56, down 0.05 percent. The EUR/USD traded at 1.1738, up 0.04 percent.

The Reserve Bank of Australia meeting minutes showed that the central bank is nervously watching labor markets in other major economies, noting barely sufficient wage even as full employment has been achieved.

“In most advanced economies, growth in wages and hourly earnings had been low, despite ongoing reductions in spare capacity.” the RBA board stated in the minutes of its November policy meeting.

“They discussed the possibility that globalization and technology were leading wage growth to be less responsive to changes in the demand for labor, which could continue for a while,” the minutes said.

The U.S. dollar index, which tracks the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.05 percent to 93.95.

On Monday, the dollar rose sharply against a basket of major currencies. It is benefitting from a slump in the euro amid growing political uncertainty in Germany after Chancellor Angela Merkel failed to form a three-way coalition.

Political hesitation swept across Germany on Monday, weighing on the euro, after talks to build the country’s next government crumpled overnight. This raised questions about the future leadership position of Angela Merkel.

The fall in the euro pushed the dollar to an almost one-week high against it rivals but its gains were limited by an uptick in sterling amid fading Brexit distress.

AUD/NZD Stays the Same

The Australian and New Zealand dollars were almost unchanged.

The Australian and New Zealand dollars were almost unchanged against their U.S. counterpart on Tuesday, while investors remained attentive during the ongoing political uncertainty in the U.S. and Europe.

AUD/USD was steady at a five-month low of 0.7545.

The Reserve Bank of Australia said in the minutes of its November policy meeting that the outlook for the economy remained on track and that no rate hikes were expected in the near term.

NZD/USD changed a little at 0.6803, which is close to Friday’s 17-month trough of 0.6780.

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