A$ Dips Post Wages Miss, But Follow Through Selling Limited

AUD/USD dipped post the Q4 wages miss. From around session highs of .6865, we fell to a low into the 0.6830/35 region. We have stabilized somewhat now, back near 0.6850. Outside of NZD, which sits slightly weaker, ahead of the upcoming RBNZ meeting, the A$ is underperforming the rest of the G10.

• The q/q wages outcome was 0.8%, versus 1.0% expected. The y/y print came in at 3.3% also below market expectations of 3.5% (which was also the RBA's forecast). At the margin this result should provide the RBA some comfort that wage pressures are not spiraling rapidly higher.
• Other data showed construction work done falling -0.4% in Q4 (versus +1.5% expected), although Q3 was revised higher to 3.7% (from 2.2%).
• Not surprisingly, AU bond yields are lower post the wages data. The 3yr bond yield got close to 3.70%, but is now back near 3.60%. The trend in AU-US yield spreads has mostly been sideways at the front end, although slightly weaker in the 10yr space, back to -7bps, versus flat at the end of last week.