AUD/USD: Trading the Australian jobs Sep 2011

The release of the Australian employment change and unemployment rate indices are critical leading indicators which always affect the markets. The importance of employment figures coupled with their publication early in the month could have a significant impact on AUD/USD.

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

Published on Thursday at 1:30 GMT.

Indicator Background

Job creation is an important leading indicator of overall economic activity. The Australian unemployment rate has held steady at a respectable 5.1%. However, the economy has been contracting in recent months, particularly in the housing sector, and this has hurt growth and job gains.

The August reading for the employment change index came in at a shocking -0.1K, as the forecast had predicted a gain of +10.2K. The forecast for September is a gain of +10.4K; any figure resembling the debacle in August could well send AUD/USD downward in a hurry.

Sentiment and Levels

Australia’s vital export sector has been hurt by the combination of falling commodity prices, lower demand for raw materials from China, and a strong Australian dollar. The Australian economy continues to show weak growth, and any bad economic news is likely to have a negative impact on the Aussie.

Technical levels from top to bottom: 1.0880, 1.0775, 1.07, 1.06, 1.0530, 1.0420 and 1.0314.

5 Scenarios

1. Within expectations: +5K to +15K: In this scenario, AUD/USD could show some slight movement, but it is likely to remain within range, not breaking any levels.
2. Above expectations: +16K to +25K: A reading above expectations would be a welcome positive sign of the health of the Australian economy, and could send the pair above one resistance level.
3. Well above expectations: Above +25K: A sharp rise in employment figures could trigger a rally, and two levels of resistance can be broken.
4. Below expectations: -6K to +4K: A reading lower than expected could push AUD/USD downward, with one level at risk.
5. Well below expectations: Below -6K: A severe loss of jobs will shake confidence in both the economy and the Aussie, and AUD/USD could break two support levels.

For more on AUD/USD, see the Australian dollar forecast.