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Australian Employment Change Preview: AUDUSD in Focus


The Australian Employment numbers will hit the markets in the early hours of Thursday January 23 at 12.30am GMT. The expectations are for unemployment rate to remain at 5.2% and for the employment change to come in at +12.2K jobs. The employment change is expected to drop from the previous reading of +39.9K jobs as the leading indicators continue to point to a softening of the labour market. Analysts at Westpac are also predicting a rise in the unemployment rate in the 2nd quarter of 2020 to 5.3%, as female participation, which has so far helped keep total participation at 66%, begins to ebb in New South Wales.

The deviation numbers to work with in terms of trading the AUDUSD remain the difference between the previous numbers and the consensus figures. This leaves the deviation at 0.0% for the unemployment rate, and 27.7K for the employment change.

Read our Best Trading Ideas for 2020.

Outlook for AUDUSD

For the news release to be tradable, there must be no conflict between the two data sets. Both data sets must move in a divergent direction as follows:

  1. Static or reduced unemployment rate along with a larger-than-expected change in job additions. This means that unemployment rate of 5.2% or lower + employment change of at least 40K or higher will be viewed as AUD-positive and should lead to bids on the AUDUSD.
  2. Static or increased unemployment rate along with a lower-than-expected change in job additions. This means that an unemployment rate of 5.2% or higher + employment change of at least -15.5K jobs or lower will be viewed as AUD-negative, which puts the AUDUSD on offer.

The general expectation is for a softer-than-expected jobs report, so if the numbers surprise the markets to the upside, we can expect a strong response on the AUDUSD.

The weekly chart shows that there is a pre-existing downtrend, which has been kept temporarily at bay by the rising channel consolidation. Even within the channel, price is fast descending towards the lower channel border. It must be noted that Australia is one of the countries where cases of the recent coronavirus outbreak have been found, so the markets and the currency have been under pressure all week. A poor jobs report could push the AUDUSD below the channel, which will cause a resumption of the downtrend and open the door towards 0.66742 as the initial target.

On the flip side, a strong jobs report could provide strong recovery, which takes the AUDUSD towards the channel’s upper border. Along the way, it has to breach the 0.70268 resistance level to be able to target this border. A break above the channel then opens the door towards April 2019 highs at 0.71718.