AUD/USD: Trading the Australian jobs Feb 2015

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 has posted excellent gains in recent readings. The December release of 37.4 thousand crushed the estimate of 5.3 thousand. However, the markets are braced for a sharp downturn in the January report, with a forecast of -4.7 thousand. Will the indicator surprise the markets and remain in positive territory?

Sentiment and Levels

US employment numbers have been positive, allaying concerns that the economy might not be strong enough to withstand a rate hike later in the year. With the RBA cutting rates last week, divergence could weigh on the Australian dollar. With the markets expecting a slump in Australian employment data, the Aussie could have a rough week.  So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels from top to bottom: 0.7978, 07904, 0.7799, 0.7601,  0.7403 and 0.7283.

5 Scenarios

1. Within expectations: -8.0K to -2.0K: 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: -1.9K to  +2.0K: A stronger reading than expected  could push the pair above one resistance level.
3. Well above expectations: Above 2.0K: A  modest rise  in employment numbers could propel AUD/USD upwards, and two or more resistance lines could be broken.
4. Below expectations: -12.0K to -8.1K: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below -12.0K: 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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