Upbeat Australia Employment Report to Curb AUDUSD Losses
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Trading the News: Australia Employment Change
Fresh updates to Australia’s employment report may curb the recent decline in AUDUSD as the economy is anticipated to add 15.0K jobs in August.
Another pick up in job growth should encourage the Reserve Bank of Australia (RBA) to keep the official cash rate (OCR) on hold at the next meeting on October 1, and Governor Philip Lowe and Co. may retain the current policy throughout the remainder of 2019 as “growth in Australia is expected to strengthen gradually to be around trend over the next couple of years.”
In turn, a print of 15.0K or greater may spur a bullish reaction in the Australian Dollar, but a below-forecast reading may fuel a larger pullback in AUDUSD as the RBA retains a dovish forward guidance and reiterates that the central bank stands ready to “ease monetary policy further if needed.”
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Impact that Australia Employment report had on AUD/USD during the previous release
|Period||Data Released||Estimate||Actual||Pips Change||Pips Change|
|08/15/2019 01:30:00 GMT||14.0K||41.1K||+24||+19|
July 2019 Australia Employment Change
AUD/USD 5-Minute Chart
Source: Trading View
Australia added 41.1K jobs in July, led by a 34.5K expansion in full-time employment, with part-time positions climbing 6.7K during the same period.
A deeper look at the report showed the Unemployment Rate holding steady at 5.2% even though the Labor Force Participation Rate unexpectedly widened to a record-high of 66.1% from 66.0% in June.
Signs of a robust labor market may keep the Reserve Bank of Australia (RBA) on the sidelines, and the central bank may largely endorse a wait-and-see approach over the coming months as “the central scenario is for the Australian economy to grow by around 2½ per cent over 2019 and 2¾ per cent over 2020.”
The Australian dollar gained ground following the upbeat employment report, with AUDUSD climbing to a high of 0.6791. Learn more with the DailyFX Advanced Guide for Trading the News.
AUD/USD Rate Daily Chart
Source: Trading View
- Keep in mind, the AUDUSD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.7007), with the exchange rate marking another failed attempt to break/close above the moving average in July.
- With that said, the broader outlook for AUDUSD remains tilted to the downside as both price and the Relative Strength Index (RSI) continue to track the bearish formations from late last year.
- More recently, AUDUSD has broken out of the range-bound price action from August following the failed attempt to test the yearly-low (0.6677), but the recent rebound in the exchange rate appears to be unraveling amid the lack of momentum to break/close above the 0.6910 (38.2% expansion) region.
- Failure to hold above the Fibonacci overlap around 0.6850 (78.6% expansion) to 0.6880 (23.6% retracement) brings the 0.6800 (61.8% expansion) handle back on the radar, with the next area of interest coming in around 0.6720 (78.6% expansion) to 0.6730 (100% expansion).
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--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.