What is this report all about?
Australia’s employment change figure shows the change in the number of people who have jobs during the month prior to the release. In other words, this report keeps track of whether jobs were created or lost in that period.
As such, the employment report is considered a leading indicator for spending and overall growth. After all, job creation usually leads to higher consumer spending, which comprises as huge chunk of economic activity.
What is expected for the upcoming release?
For April, Australia is expected to have added 7.5K jobs, a much slower pace of increase compared to March’s 18.1K reading and February’s 47.3K figure. Number crunchers estimated that this could push the jobless rate from 5.8% up to 5.9% for the month.
A lower than expected reading might be very bearish for the Australian dollar, as it could indicate that the economy has hit a soft patch when it comes to hiring. On the other hand, a huge upside surprise could give the Aussie a strong boost. Revisions in previous reports could also have an impact on the Aussie’s forex price action.
How did AUD/USD react to previous reports?
Both the March and February employment reports printed better than expected results and resulted in gains for AUD/USD. However, the rallies were short-lived, as you can see from the 1-hour forex charts below:
March jobs data: 18.1K vs. 7.3K consensus, jobless rate down from 6.0% to 5.8%
February jobs data: 47.3K vs. 15.3K consensus, jobless rate steady at 6.0%
As you’ve probably noticed, the pair’s reaction to the release typically doesn’t last by more than a hundred pips and appears to be limited until the next major or minor psychological level. Aside from that, upon reversing from these inflection points, most of the gains are erased sometime around the U.S. session until the next trading day.
Do you think we’ll see a similar reaction in this week’s Australian jobs release? Share your thoughts in our comment box or cast your votes in our poll below!