News that the rate of wage growth in Australia slowed towards the end of 2015 has weakened the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate. The ‘Kiwi’ is soft itself today thanks to a fresh rout in domestic stocks, although a lack of domestic data means that it has less to weigh it down and so it is making gains against the ‘Aussie’.
Disappointing data has further weakened the ‘Aussie’ today, with figures for the final quarter of 2015 revealing a record-low rate of wage growth. Wages grew 0.5% on the previous quarter during the final three months of last year, while year-on-year (YoY) wage growth was 2.2%. In both cases the final figures disappointed forecasts by ten basis points, unexpectedly falling.
The data represents the lowest rate of wage growth since the survey began in 1997, making it likely that the current rate of pay increase is the worst since the recession at the beginning of the 90s. It is unlikely to get much better in the near-term, with ANZ senior economist Justin Fabo explaining, ‘Wages growth is likely to remain subdued for some time due to spare labour market capacity, low inflation expectations and the downward pressure on Australian incomes from the falling terms of trade and the related necessary adjustment in Australia’s relative labour cost structure.’
Building Activity was also down more-than-expected at -3.6%, falling at twice the rate of the previous month.
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trading in the region of 1.0817.
Despite its advances on the Australian Dollar, the New Zealand Dollar is weak overall today thanks to fresh volatility on the global stock markets. Investors have deserted high-risk assets and turned to government bonds and gold after comments from Saudi Arabia set oil prices on a downtrend. According to the Saudi oil minister, there is no prospect of a production cut, which means that even if more nations commit to a production freeze, the current supply glut is likely to continue for some time.
The news has seen markets across the world fall, with the Australia ASX All Ordinaries index falling -1.90%, Japan’s Nikkei index falling -0.85% and Hong Kong’s Hang Seng down -1.1%. Oil prices haven’t been helped by the latest crude stock figures from the USA, which show a larger-than-expected increase in stockpiles, with inventories rising by 3.5 million barrels.
The New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate is currently trading between 0.9192 and 0.9242.
Australian Private Capital Expenditure figures for the final quarter of 2015 are due out tomorrow during the Australasian session and are expected to show that investment in new equipment continued to fall, although the rate of decline is predicted to shrink from -9.2% to -3%.
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trading between 1.082 and 1.0874.
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