Reserve Bank of Australia likely to stand pat in July

Australian economic growth was strong in the first quarter, rising at a 4.2 percent annualized rate. However, the solid print was driven by external demand as exports accounted for about half of the quarter’s rise in output. Domestic demand was more tepid, as consumer spending rose at a 1.4 percent annualized rate and business investment was not much stronger at 2.1 percent.

Stubbornly low wage growth and housing market/household leverage concerns have averted the central bank from joining other developed economy central banks that have tightened policy. While the RBA is eventually expected to join in policy normalization, policymakers are expected to continue to delay tightening until gradual progress in inflation and the labor market translates into higher wages, stated Wells Fargo in a research report. This would assist households deleverage and counter some of the debt servicing costs linked with rising interest rates.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at -30.5493, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -5.2322. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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