AUD/USD drops 20 pips after Ausise wage price index release

• Australia wage price inflation is showing no signs of life, is unlikely to offer support to the AUD.
• AUD/USD risks falling to 0.7412 amid the broad-based USD rally.

The AUD/USD dropped 20 pips after the Australia wage price index (WPI) came in touch softer than expected.

The wage price index rose 0.5 percent quarter-on-quarter in the first quarter, narrowly missing the estimated rise of 0.6 percent. Meanwhile, the annualized figure printed as expected at 2.1 percent.

So far, the softer WPI has not had a notable impact on the bond markets - the 10-year AU-US yield spread remains flatlined around -0.18 basis points.

However, the Aussie dollar has dropped from 0.7470 to 0.7450 post-data release and risks falling further, courtesy of the broad-based USD rally and rising yield-led risk aversion in the equity markets.

AUD/USD Technical Levels

As of writing, the pair is trading at 0.7450. The support is seen at 0.7448 (previous day's low), 0.7412 (May 9 low). Meanwhile, resistance is seen at 0.7476 (session high) and 0.7501 (10-day moving average).