On hold

The Australian economy is much like most developed economies in that its issues stem from a lack of deep and dependable wage growth. The most recent Statement on Monetary Policy (SMP) from the Reserve Bank of Australia showed that while the Australian economy has fallen from 6.3% to 5.6% since the beginning of 2015, those job gains have been largely made in sectors that are not providing wage growth.

Consumer spending is unlikely to benefit in such some circumstances and while we think that a rate hike could come towards the end of 2018, the flow through into the AUD in 2018 will be relatively mediocre.

Chinese data is still the most interesting dynamic for the Australian economy and our expectations of steady but unimpressive growth there is likely to see AUD trade in a similar manner in our opinion.

Source: Bloomberg