July 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 remain unchanged at 3.5% on a seasonally adjusted basis whereas Employment Change could ease to 25K from 88.4K. Further, the Participation Rate may remain intact at 66.8%.
Considering the Reserve Bank of Australia’s (RBA) recently cautious comments, coupled with the trouble in China and softer-than-expected Wage Price Index at home, today’s Aussie jobs report become crucial as the AUD/USD breaks monthly bullish chart formation.
Ahead of the event, analysts at Westpac said,
Given the solid demand for labor as evinced by job vacancies and consumer/business surveys, Westpac anticipates employment to lift at an around trend pace of 50k in June (market f/c: 25k). With only a small increase in participation, the unemployment rate should tick downwards from 3.5% to 3.4%.
How could the data affect AUD/USD?
AUD/USD bears lick their wounds at one week long support line, taking rounds to 0.6930 by the press time, as traders seek fresh clues amid the market’s indecision after the Fed Minutes and the recent Aussie Wage Price Index for the second quarter (Q2).
That said, hopes of an upbeat Aussie jobs report could propel the AUD/USD are fewer amid the broad pessimism surrounding economic slowdown and 75 bps Fed rate hike in September. However, strong prints of the Employment Change and softer Unemployment Rate won’t go unnoticed and hence can provide a kneejerk upside to the quote.
Considering this, FXStreet’s Valeria Bednarik says
A solid Australian employment report would be cheered by market players but also have limited positive effects on the Aussie, particularly if the market sentiment remains on the back foot. A dismal report, on the other hand, should exacerbate the dominant trend and push the AUD further down across the FX board.
Technically, a clear downside break of the one-month-old bullish channel directs AUD/USD prices towards the yearly low of 0.6678. However, 50-DMA and May’s low, respectively around 0.6900 and 0.6825, could act as buffers to the south. Meanwhile, recovery remains elusive until the quote stays below the 200-DMA level around 0.7120.
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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