AUD: BBH Says RBA Seen on Hold as Wage Growth Slows

The Australian dollar weakened after wage data were released, as markets broadly expect the Reserve Bank of Australia (RBA) to stay on hold. Elias Haddad, an analyst at Brown Brothers Harriman (BBH), noted that second-quarter wage growth matched expectations, which directly pushed Australian bond yields lower and weighed on the Aussie.

**Wage Data Dampen Rate-Hike Bets**

Latest figures show private-sector wage growth in Australia has fallen to a four-year low, becoming a key factor in market assessments of RBA policy direction. Haddad emphasized in his report that this outcome will keep the RBA on hold. Signs of a cooling labor market have quickly dissipated earlier talk of rate hikes, with pricing now more fully reflecting expectations of prolonged stability.

**Institutional Views Shift Dovish**

Beyond BBH, other major institutions have signaled similarly. Reports indicate National Australia Bank (NAB) has maintained its view that the RBA's next policy move is more likely to be a rate cut, though the exact timing remains uncertain. NAB no longer expects further hikes, believing the current cash rate of 4.35% is sufficient to curb inflation while allowing room to monitor subsequent economic data. This subtle shift in expectations—from "hawkish" to "neutral" and even "dovish"—has created sustained downward pressure on the Aussie.

**Market Impact and Outlook**

As a result, the Australian dollar has declined for multiple consecutive trading sessions. BBH analysts point out that the RBA's latest hold stance appears less hawkish than before. Absent new catalysts, the Aussie may continue to trade at low levels. Markets will closely watch Australia's employment report and inflation data to determine whether the wage slowdown is a lasting trend, which would inform reassessments of the RBA's policy path.