Australian Employment Preview: AUD to remain under pressure on weak August jobs report

The Australian Bureau of Statistics will release the August jobs report on Thursday, September 16, at 0130 GMT. Investors expect the Unemployment Rate to rise to 4.9% from 4.6% in July with the Participation Rate retreating to 65.7% from 66% and see the Employment Change arriving at -70K following the modest 2.2K increase in the previous month. 

Earlier in the month, the Reserve Bank of Australia (RBA) acknowledged that the economic recovery in the country had been interrupted by the coronavirus Delta outbreak. “The GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months,” the RBA further noted in its policy statement. 

Although the RBA decided to reduce its bond purchases to A$4 billion per week from A$5 billion, the bank said that it will review the bond-buying program again in February instead of November. This development caused the AUD to weaken against its rivals. “Bond buying will be reviewed in light of economic and health conditions and implications for full employment and inflation goal,” the bank explained.

A disappointing jobs report is likely to weigh on the AUD as it would suggest that the RBA will not be rushing to continue to taper its asset purchases. Nevertheless, investors might not put a lot of emphasis on a single reading. Similarly, a better-than-expected print could help the AUD outperform its rivals but a positive impact is likely to remain short-lived. 

AUD/USD technical outlook

The AUD/USD pair declined to its lowest level in two weeks at 0.7325 on Tuesday as the risk-averse market environment made it difficult for the AUD to find demand. On the daily chart, the Relative Strength Index (RSI) indicator fell below 50 for the first time since late August, pointing to a bearish shift in the near-term technical outlook. Additionally, the pair closed below the 50-day SMA after managing to hold above that level in the past 10 days.

At the time of press, AUD/USD is trading near the Fibonacci 38.2% retracement level of the latest uptrend at 0.7330. Below that support, the 20-day SMA aligns as interim support at 0.7315 ahead of 0.7300/0.7290 area (psychological level, Fibonacci 50% retracement) and 0.7250 (Fibonacci 61.8% retracement).

On the flip side, a daily close above 0.7380 (Fibonacci 23.6% retracements, static level) is needed for the technical outlook to turn bullish again. Next resistances are located at 0.7460 (end of the latest uptrend) and 0.7500 (psychological level).