Can Employment Data Save the Aussie?

The Australian Employment Change headline number is made up of full-time and part-time employment change.

FOREX 7

In a few hours, Australia will release the Employment Change for the month of January.  The estimate is +10,000 vs +28,900 in December.  Last month, AUD/USD was at an important inflection point in the market when the employment change was released for December.  You may recall that we discussed how it is important to look at the makeup of the headline number to get a better gauge of the data.  Australia releases a headline number, then breaks it up between full-time employment change and part-time employment change.  Last month the headline number was +28,900, however the full-time component was -300 jobs, while part-time employment was +29,200!  AUD/USD initially went bid on the headline number, only to roll over a few days later and break the neckline of the Head and Shoulders formation (and eventually reach the target). 

Source: Tradingview, FOREX.com

Today, AUD/USD sits at the bottom on a triangle.  Just a simple measurement of the triangle puts the target near .6580, which is also the 127.2 Fibonacci extension from the October 1st lows to the December 31st highs.  Price is currently trading near .6675.  A move below .6662 would be the lowest level AUD/USD has traded since January 2009!  If the employment change is worse than expected later, price would be at .6580 in a hurry!

Source: Tradingview, FOREX.com

On the other hand, AUD/JPY has been holding up well, despite the China slowdown amid the Coronavirus outbreak.  The reason is because USD/JPY has been held up by the strength of the equity markets.  USD/JPY is currently up 1.50%, or 165 pips.  This has pulled AUD/JPY higher with it, currently up 1.32%, or 97 pips!  It has closed above the 200 Day Moving Average and even filled the late January gap by 4 pips.  A stronger employment change number can have this pair moving toward horizontal resistance at .7550 and a confluence of resistance near .7600.

Source: Tradingview, FOREX.com

The one thing to remember regarding the Australian Employment Change is that the headline number is made up of full-time employment change and part-time employment change.  Although the headline number may “beat” estimates, the breakdown may be worse. As we saw last month, the “strong beat” only lasted a few days, as the breakdown between full time and part time was bad and price eventually rolled over!


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.