Australian jobs report preview: A healthy labor market may not be enough for AUD/USD

• Australia is expected to show a more modest increase in jobs in November. 
• The composition of jobs matters almost like the headline number.
• The reaction in AUD/USD depends heavily on the Fed decision.

Australia publishes its jobs report for November on Thursday, 00:30 GMT. The Land Down Under enjoyed a robust rate of jobs growth in October: no less then 32.8K positions were added to the economy, exceeding what had been expected and lifting the Australian Dollar.

Other figures shined as well. The Unemployment Rate dropped to the round level of 5%, and most importantly, the composition of full-time and part-time jobs was favorable. The economy gained 42.3K full-time positions and lost 9.5K part-time ones.

An OK report may not be good enough

Expectations for November are slightly more modest: an increase of 20K positions and a repeat of the 5% jobless rate. In theory, lower expectations make beating expectations easier, thus leaving more room for an upside surprise.

This may not be the case this time. An increase of 20K jobs is not too most, just lower than last time. In the recent past, gains of around 10K were seen more than once. Moreover, after job gains were heavily tilted towards full-time jobs, the pendulum could swing back to part-time ones. 

So, in case the Australian economy gains around 20K jobs but the lion's share of these positions is part-time ones, the A$ could slide in the aftermath.

Fed factor

Another factor to consider is the all-important Fed decision due five hours earlier. The world's most powerful central bank is set to raise rates, but there is a heap of speculation about the next moves. Markets are unsure about the Fed's guidance regarding rates in 2019. Volatility could be quite significant.

The Federal Reserve may, therefore, set the trend. In case the Fed is dovish and the greenback slides, an upbeat Australian labor report could propel AUD/USD significantly higher, as the data goes with the trend. Yet in the same dovish scenario, a poor read on Australian employment may have a limited downside reaction by the pair.

The same logic applies if the Fed is hawkish: disappointing Australian numbers could exacerbate the falls while an upbeat number may do only little to mitigate the drop.

Conclusion

Australia's jobs report carries lower expectations, but these may not be low enough. After a tilt towards full-time jobs in October, a swing back to part-time ones may also be damaging. And, the impact of the Fed may have a greater say on the reaction in AUD/USD.