AUD/USD: Muted reaction to backward-looking Aussie Q1 wage price data
- Aussie wage-price inflation rose by 2.1% in the first three months of 2020.
- Aussie consumer sentiment rebounded sharply in May, data released early Wednesday showed.
- Risk-off is keeping the Aussie bulls from cheering the improvement in the consumer sentiment.
AUD/USD is barely moving in response to economic data for the pre-coronavirus lockdown period released soon before press time.
Australia's Wage Price Index rose 2.1% year-on-year in the first quarter, as expected, following the preceding quarter's 2.2% rise. The quarter-on-quarter figure also came in line with the estimate of 0.5%. The data dates back to the period before the coronavirus-led lockdown caused massive job destruction and is being ignored by markets.
Moreover, a relatively forward-looking data released early Wednesday painted a positive picture of the Australian economy. The Melbourne Institute and Westpac Bank index of consumer sentiment jumped a record 16.4% in May, recouping most of April's 17.7% drop.
Even so, the Aussie dollar is struggling to gather upside traction, possibly because the broader market sentiment remains risk-averse with the US health officials warning against a premature reopening of the US economy. The futures tied to the S&P 500 are trading in the red at press time.
Further, the escalating China-Australia trade tensions look to be keeping the AUD bulls at bay. The dragon nation announced new tariffs of up to 80% on Australian barley imports earlier this week and also banned beef imports from four major Australian firms. China's tariff move could be associated with the Aussie PM Scott Morrison’s push for an inquiry into China’s role in the virus outbreak.
However, experts at South China Morning Post believe the moves would create space for China to import more barley and beef from the US to fulfill requirements of their phase one trade deal.
The AUD/USD pair is currently trading largely unchanged on the day at 0.6463, having printed a session low of 0.6451 in early Asia. Looking forward, if the S&P 500 futures turn positive, the AUD bulls will likely cheer the upbeat Aussie consumer sentiment data by sending the AUD higher.
Technical levels