Australian dollar extends gains after solid wage growth

[Redator]

The Australian dollar has extended its gains on Wednesday. In the European session, AUD/USD is trading at 0.6551, up 0.33% on the day. The Aussie is trading at its highest levels since July 28, as the US dollar is showing signs of weakness against the major crurrencies.

Australian wage growth steady at 3.4%

Australia's wage growth rose 3.4% y/y in the second quarter, unchanged from Q1 and just above the market estimate of 3.3%. Wages accelerated in both the public and private sectors, which accounted for the better-than-expected growth.

The labor market has been softening but wage growth still remains solid. The Reserve Bank of Australia is keeping an especially close eye on employment data, now that inflation is under control.

The RBA lowered rates on Tuesday in a widely expected decision. The central bank is sounding cautious about further rate cuts but a further deterioration in the labor market would likely force the RBA to change its tune and respond with a rate cut before the end of the year.

US CPI steady but core CPI rises

US inflation for July came in at 2.7% y/y, matching the June figure. However, core CPI surprised on the upside with a gain of 3.1%, up from 2.9% and above the market estimate of 3.0%.

A sharp drop in gasoline prices kept headline CPI in check but this was not a factor in core CPI, which excludes food and energy prices. The spike in core CPI was likely due to the effect of US tariffs, which are filtering through the economy and have raised the prices on goods imported to the US.

The inflation report has raised market expectations of a Fed rate cut in September. The markets have priced in a 96% probability of a cut, up from 84% just prior to Tuesday's inflation report.

AUD/USD Technical

• AUD/USD has pushed above resistance at 0.6528 and 0.6542 and is testing 0.6556. Above, there is resistance at 0.6596
• 0.6514 and 0.6500 are the next support levels

AUDUSD 1-Day Chart, Aug. 13, 2025

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