"Moreover, the lower-than-expected CPI outcome could not be explained entirely by temporary factors" such as lower fuel prices and that the weakness in cost pressures "had been broadly based". The RBA has also signalled that the outlook for lower inflation had the potential to further dampen wages growth, even though employers in general appear unwilling to make offers of wage growth below 2 per cent. "But if inflation was to be persistently lower than previously forecast, it was possible that in time this could be reflected in lower wage growth," the RBA added.

On Wednesday, from Australia, Wage Prices Index figures were released. The trend index and the seasonally adjusted Wage Prices Index for Australia rose 0.4% in the March quarter 2016. The Private sector rose 0.4% and the Public sector rose 0.5%, seasonally adjusted. The rises in indexes at the industry level (in original terms) ranged from 0.1% for Information media and telecommunications, Rental, hiring and real estate services and Administrative and support services to 1.0% for Education and training.

Focus of the Thursday's session was on Australian job data. Australia’s economy added jobs in April and the unemployment rate held at a 2 1/2 year low as the number of people in part-time roles increased. Unemployment was unchanged at 5.7%; economists predicted 5.8%. Employment rose 10,800 from March; economists forecast 12,000 gain. Full-time jobs fell by 9,300; part-time employment rose by 20,200. Participation rate, a measure of labor force as a share of the population, dropped to 64.8%; economists predicted 64.9%.

This week markets will be looking at:

Construction Work Done (Wednesday 3:30)

Private Capital Expenditure (Thursday 3:30)