AUD/USD: Trading the Australian jobs Jan 2014

Australian Employment Change, which is released monthly, provides a snapshot of the health of the Australian labor market. A reading which is higher than the market forecast is bullish for the Australian dollar.

Here are the details and 5 possible outcomes for AUD/USD.

Published on Thursday at 00:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus, the release of Employment Change  is a market-mover which can affect the movement of AUD/USD.

Employment Change posted a  superb gain of 21.0 thousand in the  November release,  crushing  the estimate of 10.3 thousand.  This was the strongest reading since April. The markets are expecting a lower reading for December, with the estimate standing at 10.3 thousand.

Sentiment and Levels

The Australian dollar  remains under pressure as the RBA would like to see the currency trade lower and a cut to interest rates remains an option. With QE a reality in the US and another taper a strong possibility at the January Fed meeting, the Aussie could give up some ground. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels from top to bottom: 0.9283, 0.9180, 0.9000, 0.8893,  0.8728 and 0.8578.

5 Scenarios

1. Within expectations:  7.0K to 13.0K: In this scenario, AUD/USD could show some slight  fluctuation, but it is likely to remain within range, without breaking any levels.
2. Above expectations: 13.1K to 17.0K: A strong reading could push the pair above one resistance  level.
3. Well above expectations:  Above 17.0K: A sharp rise in employment numbers could propel AUD/USD upwards, and  a second  resistance line could be broken.
4. Below expectations:  3.0K to 6.9K: A lower than expected reading could pull the pair downwards,  with one support level at risk.
5. Well below expectations:  Below -1.0K: A very poor reading will likely hurt confidence in the  Australian economy  and  AUD/USD could break below a second support level.

For more on the Aussie, see the AUD/USD forecast.

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