Ready to trade more top-tier events this week? If you are, then this trading guide is for you!
On Thursday at 1:30 am GMT, Australia is set to release its employment numbers for the month of December.
Here are answers you should know before you trade the event:
How did November’s numbers fare?
It did alright, overall. The unemployment rate inched higher from 5.6% to 5.7%, its highest since August. A closer look, however, told us that the uptick is likely due to labor force participation rate improving from 64.4% to 64.6%.
Details also revealed that a net of 39,100 workers had found jobs for the month, much higher than the expected 17,600 job growth. Not only that, but most of these new jobs are FULL-TIME placements, which should be good for consumer spending.
Adding to the pretty picture is the underemployment rate –a measure of those who are employed but who would like to work more – dropping from a record high of 8.7% to 8.3% and marking its lowest reading since August 2015.
But the RBA shouldn’t count chickens just yet. Around 107,000 part-time jobs have been added in the past 12 months against 22,000 full-time positions added. This puts employment growth to 84,900, the lowest since October 2014 and highlights the economy’s struggles to transition from a mining boom.
The Aussie gained ground as soon as traders saw the jump in participation rate and full-time placements.
The move didn’t last long, however, as risk sentiment soon dictated the Aussie pairs’ forex price action. Still, the comdoll ended the day slightly higher across the board.
What can forex traders expect this time?
Market players aren’t anticipating changes from Australia’s 5.7% unemployment rate in December. However, a net of 10,200 workers are expected to have found jobs for the month, only a fraction of November’s 39,100 figure.
How realistic are market expectations for the upcoming release? Let’s look at a few leading indicators for clues:
According to ANZ, job advertisements fell by 1.9% in December following four consecutive monthly increases. Not only that, but the annualized growth also slipped from 6.0% to 3.7%!
Next, Australian Industry Group (AIG)’s Performance of Services Index (PSI) shot up by 6.6 points to a reading of 57.7 in December and marked the highest reading since May 2007. The employment component also logged in decent gains with a 4.3-point climb to 56.6.
Like the PSI, AIG’s Performance of Manufacturing Index (PMI) also showed improvements. The index inched 1.2 points higher to 55.4 though the employment component slipped by 4.9 points to 47.4.
Last but definitely not the least is the AIG’s Performance of Construction Index (PCI) which reflected the industry contracting for a third consecutive month in December. The index increased by 0.4 points to 47.0 with the employment component falling by another 1.9 points to 43.5, its fastest decline in nine months.
Based on the indicators above, we can see that the services sector remains supportive while other industries are struggling to provide employment. This is in line with current market estimates, which see a smaller net gain in jobs added.
Any other tips I should remember?
Keep in mind that services-related jobs tend to be part-time in nature and are generally less stable.Watch out for the breakdown of Australia’s net job increases and look for full-time jobs.
While part-time jobs aren’t too bad, increases full-time employment are generally better for consumer spending (and the RBA’s peace of mind).
Oh, and unless there’s significant hit or miss from market estimates, the event isn’t likely to cause sustained moves for the major Aussie pairs.
Get ready to take or at least lock in your profits ahead of the next trading session.
That’s it for our trading guide today! Think the tidbits above will help tip the odds in your favor? Good luck and good trading, forex junkies!