AUD/USD: Trading the Australian jobs Oct 2011

The Australian employment change is an important leading indicator which often has a significant impact on the markets. Traders and analysts carefully examine employment figures in trying to determine the health and direction  of the economy.

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. The release of the employment change indicator, together with the unemployment rate, is highly anticipated by the markets. If the released figures are better than those forecast, this could give the Aussie a lift against the other major currencies.

The employment change indicators in August and September were well below the market forecasts. For October, the forecast is for 10.1K. If this worrisome downward  trend continues, and the actual figures are again well below expectations, market reaction  is sure to  be negative and the Australian dollar could take a beating.

Sentiment and Levels

The Australian dollar is recovering from a one year low against the US dollar, in large part due to the global slowdown and and a decrease in exports. On the positive side, some major economic indicators posted strong numbers, including retail sales and the trade balance. So, the overall sentiment is neutral on AUD/USD towards this release.

Technical levels from top to bottom: 1.0120, 1.00, .9930, .9880, .98 and .97.

5 Scenarios

1. Within expectations: 4K to 18K: 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: 19K to 26K: A reading above expectations would be an indication  of expansion in the economy,  and could  push the pair  above one  resistance level.
3. Well above expectations: Above 27K: A sharp rise in employment  numbers could propel the Aussie upwards, and two or more  levels of resistance can be broken.
4. Below expectations: -4K to 3K: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below -4K: Another poor reading will hurt confidence in the Australian dollar, and AUD/USD could break two  support levels.

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