AUD/USD: Trading the Australian jobs Feb 2016

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  slipped in December,  posting a decline  of  -1.0  thousand.  However, this was much better than the estimate of -11.0 thousand.  The markets are  expecting a strong turnaround  in the January report, with a forecast of  +12.9 thousand.

Sentiment and Levels

The  RBA  is maintaining  a bias towards  monetary easing, should inflation  levels soften further.  This contrasts with the situation in the US, where  a March rate hike remains a possibility. This monetary divergence is weighing on the Australian dollar.  A weaker Chinese economy and low oil prices will likely result in investors staying away from risky assets like the Aussie, in favor of the safe-haven dollar. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels from top to bottom: 0.7440, 0.7284, 0.71,  0.70, 0.6899 and  0.6775

5 Scenarios

1. Within expectations: 10.0K to 16.0K: 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: 16.1K to 20.0K: A stronger reading than expected could push  the pair above one resistance level.
3. Well above expectations: Above 20.0K:  In  this scenario,  AUD/USD  could break  above two or more resistance lines.
4. Below expectations:  6.0 to 9.9K: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below 6.0K: A  weak gain  will likely hurt confidence in the Australian economy,  and  AUD/USD could break below two or more support levels.

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