AUDJPY – Daily Chart
The Aussie dollar is looking for a breakout against major currencies, and the critical level against the yen is 93.
Australia’s lowest-paid workers were celebrating the news that the country’s minimum wage is set to match inflation; however, that could lead to further rate hikes. Economists have warned the pay move could worsen the situation for millions of Australians.
The Fair Work Commission announced that the national minimum wage would increase by 8.6%. Economists now say that the Reserve Bank will have little choice but to hike interest rates again. In a research note, AMP chief economist Shane Oliver said, “The latest minimum and award wage increases unfortunately now make a further RBA rate hike look likely.”
Oliver said the benchmark rate would likely jump to 4.1% on Tuesday, with a 25 basis point increase. “Or if not on Tuesday, then in July,” he added. “The money market now has priced a 42% chance of a 25 basis point hike on Tuesday and an 80% chance by July.”
The interest rate decision comes after disappointing inflation data from the Australian Bureau of Statistics released this week, showing consumer prices rose by 6.8% from 12 months to April.
“The RBA will be concerned that inflation is too high,” Dr Oliver warned.
The Australian cash rate is now at its highest in eleven years after the RBA reversed its stubborn stance on low rates.
Meanwhile, billionaire miner Gina Rinehart hit out at Labor and the state of Australia in a speech criticising immigration and the government’s attacks on the mining industry.
Ms. Rinehart, chairman of Hancock Prospecting, said that Australia needed “more mines” if it would prosper and claimed there was a $60bn investment shortfall in the industry.
“Our budget had a small surplus thanks to our industry, but still huge debt, a debt costing Australians around $60 million each day,” Ms. Rhinehart said.