May 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.

Market consensus suggests that the headline Unemployment Rate may ease to 3.8% from 3.9% on a seasonally adjusted basis whereas Employment Change could rise to 25K from 4K. Further, the Participation Rate may also improve to 66.4% from 66.3% previous readings.

In addition to the Aussie jobs report, the quarterly release of the Reserve Bank of Australia (RBA) Bulletin will also be important for the AUD/USD traders considering the recently mixed data and the central bank’s hawkish bias.

Ahead of the event, analysts at Westpac said,

Despite the robust demand for labor as evinced by job vacancies, weekly payrolls remain weak; Westpac therefore anticipates employment to lift by 5k in May (vs. consensus +25k) with a clear risk of a negative print. A very small decline in participation should see the unemployment rate round down to 3.8%. MI inflation expectations should continue to hold at an elevated level in June.

TD Securities said,

A strong May labour market print may concern the RBA further on the wages front, with accelerating wages growth complicating their fight to bring inflation back to target. Thus, we expect the RBA to hike again by 50bps in July due to the risks to wages growth from the minimum wage decision and a very tight labour market.

How could the data affect AUD/USD?

AUD/USD extends the post-Fed gains, the biggest in six weeks, towards the weekly top surrounding 0.7050 ahead of the Aussie employment report for May. The risk barometer pair’s latest gains could be linked to the market’s upbeat mood due to the sustained downturn in yields and the US dollar.

That said, the recently mixed Aussie data challenges the RBA to move forward on its hawkish path. However, the Fed’s latest 75 bp moves allow the AUD/USD bulls to remain hopeful should the scheduled jobs report print upbeat figures.

Considering this, FXStreet’s Valeria Bednarik says

A scenario of solid job creation alongside expectations for rising inflation would surely be a boost for the Aussie, moreover after the dust settles post-Fed. However, if employment figures disappoint and inflation pressures ease, the Aussie could suffer a major setback.

Technically, AUD/USD battles with short-term resistance confluence surrounding 0.7030-35, comprising the multiple levels marked since early May. Given the recently positive oscillators, the buyers are likely to cross the immediate hurdle and brace for the 0.7100 mark, provided the scheduled data support the bulls. On the contrary, a downside break of January’s low near 0.6965 could be enough to recall the bears.

Key Notes

Australian Employment Preview: Job creation could pick up, but what about inflation?

AUD/USD defends post-Fed gains around 0.7000 with eyes on Australia Employment

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).

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