AUD/USD: Trading the Australian jobs Oct 2012

The Australian Employment Change indicator, released monthly, is an important leading indicator  which  is released together with  the Unemployment Rate.  An  unexpected reading in Employment Change  can affect the movement of AUD/USD. 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

Employment Change is always eagerly awaited by the markets, since job creation is one of the most important  catalysts for economic growth.  Stronger employment numbers are reflective of a healthier and more robust Australian economy.

According to the indicator, the  economy lost 8.8 thousand jobs in August. This was nowhere near the estimate, which had predicted an increase of 5.1K. The  markets are predicting that  the September numbers will be much stronger, with a forecast of a gain of 4.4K. Will  the indicator rebound with a positive reading?

Sentiment and Levels

The Australian dollar lost some ground  last week with the unexpected rate cut by the RBA, and is back down to  the levels where it  commenced a strong September rally. What’s next for the volatile aussie? Australian data has been generally weak, and the rate cut could be the start of a drop towards the  critical parity line. On the flip side, if the US economy continues to show some improvement, such as in recent employment numbers, we may see the Aussie move back up. So, the overall sentiment is  neutral on AUD/USD towards this release.

Technical levels from top to bottom: 1.0402, 1.0340, 1.0230, 1.0174,    1.0080 and 1.00.

5 Scenarios

1. Within expectations: 1.0K to 7.0K: 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: 7.1K to 10.0K: A strong reading could push the pair above one resistance level.
3. Well above expectations: Above 10.0K: A sharp rise in employment numbers could propel AUD/USD upwards, and two or more resistance lines could fall.
4. Below expectations: -2.0K to 0.9K: A weak release could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below -2.0K: A very poor reading will hurt confidence in the aussie and AUD/USD could break two or more support levels.

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