Aussie firms on broad USD softness ahead of wages and labour force data

The Aussie has had a strong start to the week, climbing above 71 UScents for the first time since early June as USD weakness continued.That said, the currency did go on to lose some steam as a permanentresolution between the US and Iran continued to fade. Domestically, this week's data has been limited to WMI consumersentiment for August. The survey showed sentiment rising 6% throughthe month, with the gain concentrated among mortgage holdersfollowing the RBA's decision to hold, while sentiment among renterseased modestly. House price expectations continued to soften, down6.1% through the month, while unemployment expectations rosemodestly. Consumer views on family finances and economic conditions,over one and five year horizons, improved but continue to sit below theirhistorical averages. Additionally, the time to buy a household item index,which correlates well with retail spending, also improved 8.1%,suggesting spending could hold up reasonably well in the third quarter,though the index remains around 24% below its long run average.Globally, the focus has been on the Middle East. Brent crude prices haverisen to around $91/bbl (from around $88/bbl at the end of last week) ashopes of a US-Iran resolution continued to fade. The 60-day truceexpired Monday, and Trump signalled no interest in extending it, citingpressure from the naval blockade on Iran. His threat to strike Oman overthe blockade added to tensions, even as Oman and Iran edge towardtheir own deal on Hormuz traffic. That said this arrangement is unlikelyto fully restore flows through the Persian Gulf without Washington'sinvolvement Looking ahead, the local focus will be on Q2 WPI and July labour forcedata. We expect wages to rise around 0.8% QoQ, which would see the annualrate ease to 3.2% from 3.3%. While we think the data for the Septemberquarter will be more telling of the current wages landscape given therecent FWC decision to raise national minimum and modern awardwages by 4.75%, today's data will still offer a read on whether wagepressures were already building ahead of that. Having said this, wecontinue to believe that the emerging slack in the labour market shouldkeep wage pressures broadly contained.Globally, the focus has been on the Middle East. Brent crude prices haverisen to around $91/bbl (from around $88/bbl at the end of last week) ashopes of a US-Iran resolution continued to fade. The 60-day truceexpired Monday, and Trump signalled no interest in extending it, citingpressure from the naval blockade on Iran. His threat to strike Oman overthe blockade added to tensions, even as Oman and Iran edge towardtheir own deal on Hormuz traffic. That said this arrangement is unlikelyto fully restore flows through the Persian Gulf without any USinvolvement