AUD/USD: Trading the Australian jobs Oct 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  remarkably strong reading of 121,000 last month.  The indicator is expected to post a sharp decline in the upcoming reading, with the estimate standing at -29.6 thousand. If the indicator does show such a sharp contraction, the Australian dollar could lose ground.

Sentiment and Levels

The Australian dollar flirted with 4-year lows last week, and surrendered a staggering 500 points in the month of September.  However, despite the Aussie’s descent, the RBA has said that the currency remains overvalued and is weighing on the weak economy. In the US, things are looking bright as  a deepening recovery in the US  and  an expected hike in interest rates bodes well for the greenback. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels from top to bottom: 0.9175, 0.090, 0.90, 0.8891,  0.8660 and 0.8580.

5 Scenarios

1. Within expectations: -33.0K to -26.0K: 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: -25.9K to -20.0K: A strong reading could push the pair above one resistance level.
3. Well above expectations: Above -20.0K: A sharp rise in employment numbers could propel AUD/USD upwards, and two or more resistance lines could be broken.
4. Below expectations: -39.0K to -33.1K: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below -39.0K: A very poor reading will likely hurt confidence in the Australian economy  and  AUD/USD could break two or more support levels.

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

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