Aussie, kiwi ease

The Australian dollar briefly fell on Wednesday after slower-than-expected wages growth bolstered views that interest rates in the country will stay lower for longer, while its New Zealand cousin stayed near a recent five-month trough. The Australian dollar went as low as $0.7447 just after the data, about 0.4 percent down from the day's high. It was last at $0.7574, within spitting distance of a recent 11-month trough of $0.7413.
Wednesday's figures from the Australian Bureau of Statistics showed annual wage growth at 2.1 percent in the first quarter, similar to the fourth quarter rate, and only just above the all-time trough of 1.9 percent. Across the Tasman Sea, the New Zealand dollar stayed near a five-month trough at $0.6868 after two consecutive days of losses.
Wage growth has now stayed stuck around 2 percent since early 2016 and is half the rate workers enjoyed during the decade-long mining boom that began in the early 2000s. "There are very limited signs that wages will accelerate meaningfully from current levels in the near-term," said AMP Capital Senior Economist Diana Mousina.
"Overall, the outlook for the consumer remains challenging and is a risk for Australian growth in the near-term," Mousina added. "We remain of the view that the RBA won't be able to lift the cash rate again until 2020." New Zealand government bonds were slightly up with yields down about 1 basis point across the curve.
Australian government bond futures eased, with the three-year bond contract down 3 ticks at 97.73. The 10-year contract slipped 5.5 ticks to 97.105. The Reserve Bank of Australia (RBA) last cut rates to a historical low of 1.5 percent in August 2016, notching up the longest period without a change in modern history. Financial markets are wagering the steady spell could last well into 2019.
Investors will next veer their attention to Australia's labour market data due Thursday which is likely to show unemployment stuck at 5.5 percent even as jobs growth continue. Investors shrugged off strong dairy prices in a fortnightly auction, largely because prices for Australia's main goods export - whole milk power - were flat.
The market is now focussed on the new centre-left Labour government's first annual budget on Thursday. Labour's plans to pour money into social services and pay down debt a little more slowly than the previous government have been widely flagged, likely avoiding any dramatic fallout for the currency.