- Australia Employment to Increase for Third-Consecutive Month.
- Unemployment Rate Hold at Annualized 5.8% for Second Month.
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Trading the News: Australia Employment
Another 10.0K expansion in Australia Employment may generate a near-term rebound in AUD/USD as a further improvement in the labor market raises the Reserve Bank of Australia’s (RBA) scope to retain the current policy at the interest-rate decision on September 6.
What’s Expected:
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Why Is This Event Important:
With Governor Glenn Stevens scheduled to depart from the central bank next month, the RBA may largely endorse a wait-and-see approach for monetary policy, and AUD/USD may stands at risk of extending the advance from earlier this year especially as the Federal Open Market Committee (FOMC) delays its normalize cycle.
Expectations: Bullish Argument/Scenario
| Release | Expected | Actual |
|---|---|---|
| HIA New Home Sales (MoM) (JUN) | -- | 8.2% |
| AiG Performance of Services (JUL) | -- | 53.9 |
| AiG Performance of Manufacturing (JUL) | -- | 56.4 |
The ongoing expansion in the housing market coupled with the pickup in business sentiment may encourage a strong employment report, and a marked pickup in Australia job growth may trigger a bullish reaction in AUD/USD as market participants scale back bets for lower borrowing-costs.
Risk: Bearish Argument/Scenario
| Release | Expected | Actual |
|---|---|---|
| Retail Sales (MoM) (JUN) | 0.3% | 0.1% |
| Trade Balance (JUN) | -2.000B | -3.195B |
| Private Sector Credit (YoY) (JUN) | 6.5% | 6.2% |
However, waning demand from home and abroad may push Australian firms to scale back on hiring, and a dismal development may trigger a larger pullback in the aussie-dollar as it drags on interest-rate expectations.
How To Trade This Event Risk(Video)
Bullish AUD Trade: Australia Adds 10.0K Jobs or Greater
- Need green, five-minute candle following the print for a long AUD/USD trade.
- If market reaction favors a bullish aussie position, buy AUD/USD with two separate lots.
- Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
- Move stop to breakeven on remaining position once initial target is met, set reasonable limit.
Bearish AUD Trade: Labor Report Fails to Meet Market Expectations
- Need red, five-minute candle to consider a short AUD/USD position.
- Carry out the same setup as the bullish aussie trade, just in the opposite direction.
Potential Price Targets For The Release
AUD/USD Daily
- Will retain a constructive view for AUD/USD as prices and the Relative Strength Index (RSI) preserve the bullish formations carried over from late-May, with a closing price above 0.7740 (78.6% expansion) raising the risk for run a the 2016 high (0.7834).
- Key Resistance: 0.7848 (June 2015 high) to 0.7860 (61.8% expansion)
- Key Support: 0.6826 (2016 low) to 0.6830 (161.8% expansion)
Check out the short-term technical levels that matter for AUD/JPY heading into the report!
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Impact that the Australia Employment report has had on AUD during the last release
| Period | Data Released | Estimate | Actual | Pips Change | Pips Change |
|---|---|---|---|---|---|
| JUN 2016 | 07/14/2016 01:30 GMT | 10.0K | 7.9K | +27 | +28 |
June 2016 Australia Employment
AUD/USD 5-Minute Chart
The Australian economy added another 7.9K jobs in June following a revised 19.2K expansion the month prior, while the jobless rate advanced to an annualized 5.8% from 5.7% as the Participation Rate unexpectedly climbed to 64.9% from 64.8% during the same period. A deeper look at the report showed the job gains were led by a 38.4K rise in full-time employment, while part-time positions narrowed 30.6K during the same period after rising a revised 16.6K in May. The Australian dollar gained ground following the improvement in labor-market dynamics, with AUD/USD coming off of 0.7598 to end the day at 0.7630.
Get our top trading opportunities of 2016 HERE
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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