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AUDUSD Eyes September High as Employment Rebounds

AUDUSD Eyes September High as Employment Rebounds

David Song, Strategist

- Australia Employment to Mark First Rise Since June

- AUDUSD Bullish Trend Remains Intact; Key Resistance Ahead

Trading the News: Australia Employment Change

The bullish trend in the AUDUSD may continue to gather pace over the next 24-hours of trading as the Australian economy is expected to add 15.0K jobs in September.

What’s Expected:

Time of release: 10/10/2013 0:30 GMT, 20:30 EDT

Primary Pair Impact: AUDUSD

Expected: 15.0K

Previous: -10.8K

DailyFX Forecast: -10.0K to 15.0K

Why Is This Event Important:

Indeed, a rebound in job growth may encourage the Reserve Bank of Australia (RBA) to carry its wait-and-see approach into 2014, but the employment report has failed to meet market expectations over the last two prints (July & August) amid the ongoing slack in the $1T economy.

Expectations: Bullish Argument/Scenario

Release

Expected

Actual

ANZ Job Advertisements (MoM) (SEP)

--

0.2%

NAB Business Confidence (SEP)

--

12

Retail Sales (MoM) (AUG)

0.3%

0.4%

The ongoing improvement in business confidence along with the pickup in private sector consumption may prompt a more meaningful rebound in employment, and a positive print is likely to prop up the aussie as market participants scale back bets for additional RBA rate cuts.

Risk: Bearish Argument/Scenario

Release

Expected

Actual

Building Approvals (MoM) (AUG)

-0.5%

-4.7%

Trade Balance (AUG)

-400M

-815M

Company Operating Profits (QoQ) (2Q)

0.9%

-0.8%

However, the slowdown in global trade paired with the persistent slack in the real economy may continue to generate a weaker-than-expected labor report, and a dismal development may threaten the bullish trend in the AUDUSD as it renews bets for lower borrowing costs.

How To Trade This Event Risk(Video)

Bullish AUD Trade: Employment Rebounds 15.0K or Greater

  • Need green, five-minute candle following the print to consider a long Australian dollar trade
  • If market reaction favors a long trade, buy AUDUSD with two separate position
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish AUD Trade: Job Growth Weakens for Third Month

  • Need red, five-minute candle to favor a short AUDUSD trade
  • Implement same setup as the bullish Australian dollar trade, just in opposite direction

Potential Price Targets For The Release

AUDUSD Daily

Forex_AUDUSD_Eyes_September_High_as_Employment_Rebounds_body_Picture_2.png, AUDUSD Eyes September High as Employment Rebounds

Chart - Created Using FXCM Marketscope 2.0

  • Upward Trending Channel Continues to Take Shape
  • Relative Strength Index Holds Above Support (53)
  • Interim Resistance: 0.9500 (38.2% retracement) to 0.9520 (1.618% expansion)
  • Interim Support: 0.9270 (100.0% expansion) to 0.9290 Pivot

Impact that the change in Australia Employment has had on AUD during the last month

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

AUG 2013

09/12/2013 1:30 GMT

10.0K

-10.8K

-65

-60

August 2013 Australia Employment Change

Forex_AUDUSD_Eyes_September_High_as_Employment_Rebounds_body_ScreenShot214.png, AUDUSD Eyes September High as Employment Rebounds

Australia lost another 10.8K jobs in August, with the unemployment rate advancing to 5.8% from 5.7% the month prior, and the ongoing weakness in the labor market may prompt the RBA to further embark on its easing cycle to further insulate the $1T economy. Indeed, the Australian dollar took a spill following the weaker-than-expected print, with the AUDUSD slipping below the 0.9300 handle, and the higher-yielding currency struggled to hold its ground throughout the day as the pair closed at 0.9269.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com

Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, please follow this link

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