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Trading the News: Australia Employment Change

Australia’s Employment report may fuel the recent recovery in AUD/USD as the economy is anticipated to add another 20.0K jobs in October.

Image of DailyFX economic calendar

An uptick in job growth may spark a bullish reaction in the Australian dollar as it boosts the outlook for growth and inflation, and Reserve Bank of Australia (RBA) may come under pressure to lift the official cash rate (OCR) off of the record-low as ‘the outlook for the labour market remains positive.

In turn, batch of positive data prints fuel the recent series of higher highs & lows in AUD/USD, but a dismal development may curb the advance from earlier this week as it encourages Governor Philip Lowe & Co. to retain a wait-and-see approach in the first-half of 2019. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Impact that Australia 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)

OCT

2018

10/18/2018 00:30:00 GMT

15.0K

5.6K

+1

-15

October 2018 Australia Employment Change

AUD/USD 5-Minute Chart

Image of audusd 5-minute chart

Australia added a meager 5.6K jobs in October following a revised 44.6K expansion the month prior, while the Unemployment Rate unexpected narrowed to 5.0% from 5.3% per annum as the Participation Rate slipped to 64.5% from 65.7% during the same period. A deeper look at the report showed full-time positions increasing another 20.3K after climbing 35.2K in August, while part-time jobs slipped 14.7K to shed the 9.5K rise from the previous month.

The initial advance following the drop in the Unemployment Rate was short-lived, with AUD/USD largely consolidating throughout the day as the exchange rate closed at 0.7099. Learn more with the DailyFX Advanced Guide for Trading the News.

AUD/USD Daily Chart

Image of audusd daily chart
  • Recent price action undermines theadvance from the 2018-low (0.7085) as AUD/USD fails to test the September-high (0.7315), with the exchange rate at risk of exhibiting a more bearish behavior as it appears to be responding to trendline resistance.
  • In turn, a break/close below the 0.7170 (23.6% expansion) to 0.7180 (61.8% retracement) region opens up the 0.7090 (78.6% retracement) to 0.7110 (78.6% retracement) area, with the next downside hurdle coming in around 0.7020 (50% expansion, which largely lines up with the 2018-low (0.7021).
  • However, the recent series of higher highs & lows may spur a move towards the Fibonacci overlap around 0.7320 (50% expansion) to 0.7340 (61.8% retracement) as the Relative Strength Index (RSI) continues to track the bullish formation carried over from the previous month.

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide!

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader series on how to effectively use leverage along with other best practices that any trader can follow.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.