- Australia Employment to Increase for Seventh Consecutive Month.

- Jobless Rate to Hold at Annualized 5.9% for Third Month.

Trading the News: Australia Employment Change

Australia Employment

Australia’s Employment report may prop up the AUD/USD exchange rate over the next 24-hours of trade as the economy is anticipated to add another 5.0K jobs in April.

Why Is This Event Important:

A further improvement in labor market dynamics may heighten the appeal of the Australia dollar as it boosts the outlook for growth and inflation, and the Reserve Bank of Australia (RBA) may change its tune over the coming months as ‘forward-looking indicators continued to suggest that employment growth would maintain its recent pace and spare capacity in the labour market would decline gradually.’ However, Governor Philip Lowe and Co. may attempt to buy more time as officials warn ‘growth in housing credit had continued to outpace growth in household incomes, which suggested that the risks associated with household balance sheets had been rising,’ and the RBA may preserve the accommodate policy stance throughout 2017 as wage growth remains at a record-low.

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Impact that theAustralia Employment report has had on AUD/USD during the previous print

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

MAR

2017

04/13/2017 01:30 GMT

20.0K

60.9K

+31

+32

March 2017 Australia Employment Change

AUD/USD 5-Minute

AUD/USD Chart

Australia added another 60.9K jobs in March led by a jump in full-time positions, while the jobless rate held steady at an annualized 5.9% for the second month. The ongoing improvement in the labor market may encourage the Reserve Bank of Australia (RBA) to highlight an improved outlook for the region, but the central bank appears to be in no rush to lift the cash rate off of the record-low amid the rebalancing in the real economy. Nevertheless, the Australian dollar gained ground following the better-than-expected employment report, with the pair ending the day at 0.7568.

How To Trade This Event Risk(Video)

Bullish AUD Trade: Australia Adds 5.0K Jobs or More

  • Need a green, five-minute candle following the report to favor a long AUD/USD position.
  • If the 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: Employment Report Fails to Meet Market Expectations

  • Need a red, five-minute candle to favor a short aussie trade.
  • Implement the same setup as the bullish AUD setup, just in reverse.

Potential Price Targets For The Release

AUD/USD Daily

AUD/USD Daily Chart

Chart - Created Using Trading View

  • AUD/USD remains at risk of giving back the rebound from the December-low (0.7160) as price & the Relative Strength Index (RSI) retain the bearish formations from earlier this year, with the near-term outlook capped by the 0.7450 (38.2% retracement) hurdle; a closing price below 0.7390 (38.2% retracement) may spur another test of the Fibonacci overlap around 0.7330 (50% retracement) to 0.7360 (38.2% expansion), with the next downside region of interest coming in around 0.7290 (50% expansion) to 0.7300 (78.6% retracement).
  • Interim Resistance: 0.7730 (61.8% retracement) to 0.7770 (61.8% expansion)
  • Interim Support: 0.7150 (161.8% expansion) to 0.7180 (61.8% retracement)

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IG Sentiment

Retail trader data shows 54.2% of traders are net-long AUD/USD with the ratio of traders long to short at 1.18 to 1. In fact, traders have remained net-long since May 03 when AUD/USD traded near 0.75395; price has moved 1.5% lower since then. The percentage of traders net-long is now its lowest since May 02 when AUDUSD traded near 0.75395. The number of traders net-long is 12.5% lower than yesterday and 14.6% lower from last week, while the number of traders net-short is 0.7% lower than yesterday and 5.1% higher from last week. For more information on retail sentiment, check out the new gauge developed by DailyFX based on trader positioning.

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--- Written by David Song, Currency Analyst

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