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).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.