Average Hourly Earnings Slow
The US average hourly earnings data for the month recorded a 0.2% increase, lower than the market forecast of 0.3%. This figure is the same as the previous period, which was also at 0.2%, indicating that US wage growth remains stable but has not yet shown stronger upward pressure.
This wage data is of significant market interest because it is directly related to inflationary pressures. When wage growth slows or is lower than expected, inflationary pressures on workers' incomes have the potential to subside. This could lead the market to believe that the Fed has more room to be less aggressive on interest rates.
For the US dollar, this data tends to be negative because a lower-than-expected wage increase could reduce expectations that the Fed will maintain a tighter policy for longer. If the market perceives inflationary pressures to weaken, the dollar could lose steam as the possibility of future interest rate cuts reopens.
Meanwhile, gold could potentially gain support from weaker wage data. A 0.2% increase in average hourly earnings could pressure the dollar and US bond yields, making gold more attractive to investors. However, gold's movement will still depend on a combination of other labor data, including the NFP and unemployment rate.
Impact on the US Dollar:
The US dollar has the potential to weaken due to lower-than-expected wage data. The 0.2% figure indicates that inflationary pressures from the wage side are not increasing, so the market may judge that the Fed does not need to be too hawkish.
Impact on Gold:
Gold has the potential to strengthen because lower wage data can put pressure on the US dollar and bond yields. If the market interprets this data as a signal that inflation is starting to ease, gold could receive an additional boost as an asset sensitive to interest rate expectations. (CP)
Source: Newsmaker.id
