Early Thursday markets will see Australian Bureau of Statistics releasing Aussie employment data for July at 11:30 Sydney/9:30 Singapore/HK and 01:30 GMT. Following downbeat readings in June, markets will keep a close eye on the employment data to better foresee future policy moves by the Reserve Bank of Australia (RBA) considering its emphasis on the unemployment rate.
Market consensus favors Employment Change to increase from 0.5K to 14.0K on a seasonally adjusted basis whereas no change is anticipated in the Unemployment Rate of 5.2% and Participation Rate of 66.0%.
TD Securities expects an uptick in the Unemployment Rate to firm their call for November rate cut as their latest report says:
We look for the unemployment rate to tick up another notch to 5.3% in July (mkt 5.2% but heavily skewed higher), which would be its highest level in almost a year. In the Aug SoMP, the RBA forecast the u-rate to hold steady at 5.2% on average through the end of 2020, before edging lower again. So a turn higher in the u-rate supports our call for further RBA rate cuts in November 2019 and May 2020. For employment growth, we're just a touch above consensus in looking for an 18k increase (mkt 14k), but we think that attention will be focused much more closely on the unemployment rate.
Westpac also forecasts downbeat jobs report as their analysts say:
June saw a near-flat reading on total employment, though with full-time jobs up 21k, offset by a similar fall in part-time jobs. This followed steep gains in Apr and May, both >40k. Westpac looks for another modest rise, 5k, which would keep annual jobs growth at a still swift 2.4%. The median forecast is 14k, with most between +10k and +22k. We look for the unemployment rate to round up to 5.3% versus consensus of steady at 5.2%.
How could the data affect AUD/USD?
The RBA is considered less dovish in its latest media releases and has also said that they emphasize more on inflation numbers than unemployment. Hence, a mild uptick in the unemployment will not be considered as a strong signal for the central bank’s another rate cut. However, weakness in employment data will lead to low price pressure and can increase the odds for future rate cuts, which in turn can fetch the Aussie downwards. It should also be noted that the market has recently been on a risk-off mode and the latest trade positive news have also played their role.
Technically, 0.6831/37 area comprising June month low and 21-day exponential moving average (EMA) can keep exerting downside pressure on the prices, a break of which can trigger prices run-up to 0.6900 and July 10 low of 0.6978. Alternatively, 0.6736, 0.66700 and 0.6677 are likely numbers that the bears may watch during the course of further declines.
About the Employment Change
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).
About the Unemployment Rate
The Unemployment Rate release by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labor force. If the rate hikes, indicates a lack of expansion within the Australian labor market. As a result, a rise leads to weaken the Australian economy. A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish).
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