Australian economy likely to have expanded in Q4, RBA to hike rates in end-2018 or earl 2019

In the third quarter of last year, the Australian economy grew 2.8 percent year-on-year, thanks to a rebound in investment spending and a moderate build in inventories. While the business sector grew in the third quarter, private consumption was subdued, rising just 0.1 percent sequentially.

But recent data indicated to a rebounding consumer outlook, noted Wells Fargo in a research report. Monthly retail sales had risen at an average pace of 2.4 percent year-on-year in the fourth quarter, while the jobless rate continues to trend lower. The economy is likely poised for further growth, as consumer spending rebounds and a tighter labor market should put upward pressure on wages.

The Reserve Bank of Australia is set to meet next week. Subdued wage growth, below-target inflation and high levels of household debt have kept the Australian central bank on hold for the past several quarters. But, its latest policy statement cited rebounding economic conditions. In the midst of slowly rising inflation, the RBA is expected to hikes rates later in 2018 or in early 2019, stated Wells Fargo.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at 36.8304, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -32.9733. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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