Australian Employment Preview: Soft outcome anticipated amid recent lockdowns

Australia will publish June employment figures on Thursday, July 15. The country is expected to have added just 30,000 new jobs in the month, after a whopping 115.2K increase in the previous month. The soft number is a result of the latest regional lockdowns that affected the country, aimed to contain the spread of COVID-19. The Unemployment rate is foreseen rising from 5.1% to 5.5% while the Participation Rate is expected to have surged to 66.3% from 66.2%.

Employment and the RBA

Jobs’ creation was surprisingly high in the previous month, putting in doubt the Reserve Bank of Australia’s ultra-loose monetary policy. The central bank has maintained the dovish stance in its latest meeting, and the latest pandemic developments clearly support their stance.

The RBA has maintained the cash rate unchanged at 0.1% and the 3-year bond yields target at the same level, at least until April 2024. Despite noting that the economic recovery continues at a faster than expected pace, policymakers noted that inflation and wages growth remain subdued. The current monetary policy will be reviewed back in November.

AUD/USD possible scenarios

The soft outcome is mostly priced in. The Australian dollar has reached this month a fresh 2021 low, and so far, recoveries had been a case of the greenback’s weakness rather than aussie’s strength. Despite the fact that investors are already expecting a tepid report, the pair may fall with a disappointing release toward the yearly low at 0.7409. The figures need to diverge strongly from expectations for the pair to reach lower lows.

A positive surprise may help the pair retest the 0.7500 area. Gains beyond the level will depend on the American currency weakness rather than on an upbeat report.

Technically speaking, the daily chart offers a neutral-to-bearish stance. The 100 DMA is currently at 0.7512, and immediate barrier. The pair would need to break through the area with a strong bullish momentum to spur additional demand and helped it toward the 0.7550/60 price zone.