When is the Australian employment report and how could it affect AUD/USD?

August month employment statistics from the Australian Bureau of Statistics, up for publishing at 01:30 GMT on Thursday, will be the immediate catalyst for the AUD/USD pair traders. The figures become more important after the recently dovish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe.

Market consensus favors Employment Change to drop from +2.2K previous readouts to -70.0K on a seasonally adjusted basis whereas the Unemployment Rate is likely to rise from 4.6% to 4.9%. Further, the Participation Rate may also slow down from 66.00% to 65.7%.

TD Securities expect a mixed data while saying,

Employment is likely to decline sharply in August with NSW and VIC in lockdown. However, we are more optimistic than the market and expect employment to decline by 65k (market forecast: -80k) as fiscal support is likely to partly offset some job losses. This was seen in the July labor data with the adjustment to the labor market occurring through lower hours worked and not job losses. Nonetheless, the participation rate is still likely to edge lower to 65.8% (July: 66.0%) while the unemployment rate is expected to creep higher to 4.9% (Jul: 4.6%) in August.

Additionally, analysts at Westpac said,

The focus is on the size of the hit to jobs from the combined Sydney and Melbourne lockdowns. Looking at the ABS payrolls estimate, through the month to 14 August, payrolls are down -2.4%. Making an allowance for potential revisions our employment forecast is –150k (–1.6% not seasonally adjusted). This brings the proportional variation between payrolls and employment closer to what was seen during the lockdowns last year but we still see upside (a smaller negative) rather than downside to our forecast. The median forecast is -80k but with a wide range of -300k to +2k. Lockdowns weigh on the participation rate, meaning the unemployment rate is misleadingly low – just 4.6% in July. We look for a rise to 5.0% in August, in line with the median forecast.

How could the data affect AUD/USD?

AUD/USD struggles to keep the previous day’s rebound from a monthly low while edging higher around 0.7340 before the key Aussie data release. While the receding chatters supporting the Fed’s tapering seems to have triggered the pair’s corrective pullback the previous day, headlines concerning China and the pre-data anxiety seems to challenge the bulls of late.

Among the major hurdles, Australia’s security pact with the UK and the US weigh on its already bad relations with the biggest customer China. Also, downbeat expectations from the Aussie data and RBA Governor Lowe’s covid fears keep AUD/USD sellers hopeful.

However, the weaker numbers are already a known fact considering the local lockdown and hence may not have a major downside impact on the AUD/USD prices unless coming out as too negative. On the contrary, positive surprises will be welcomed as RBA’s Lowe rejects the rate hike tantrum despite speaking of economic fears from the COVID-19 outbreak in Australia.

Technically, AUD/USD bounced off August 31 lows the previous day while taking a U-turn from 20-DMA, around 0.7327 by the press time. The rebound currently battles a downward sloping trend line from September 07. In addition to the stated trend line hurdle, steady RSI and fears of downbeat employment figures also challenge the pair bulls. Hence, a clear upside break of the stated resistance line, near 0.7335, followed by the 50-DMA level of 0.7350, becomes necessary for the pair to extend the latest advances.

Key Notes

AUD/USD Price Analysis: Weekly resistance, 50-DMA in focus ahead of Australia employment

AUD/USD steady above 0.7300 awaits for Australian employment data

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

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 released 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).