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G’day forex mates! It’s time for yet another event preview as the Land Down Under gears up to release its jobs report for the month of January, due out at 12:30 am GMT, February 21st.

If you’re planning on trading this top-tier event or got some AUD positions open, let’s start prepping by reading up on what happened before, what’s expected, and how the Aussie might react.

What happened last time?

  • December employment change: 21.6K vs. 17.3K consensus
  • November employment change upgraded from 37K to 39K
  • Dec. unemployment rate fell from 5.1% to 5.0% vs. 5.1% estimate

The December headline figures hit all the right marks, beating the consensus for both the employment change reading and the unemployment rate. To top it off, the previous month’s reading enjoyed an upgrade from 37K to 39K.

However, a closer look at the underlying figures reveals that the gains were mostly from part-time hiring to the tune of 24.6K while full-time employment actually sank by 3K. This also marked the second consecutive monthly decline in full-time jobs.

Furthermore, the measure of underutilization remains elevated at 13.4%, which puts downside pressure on wage growth. Also, the dip in the unemployment rate can partly be attributed to a reduction in the labor force participation rate from 65.7% to 65.6%.

This suggests that Aussies may be dropping out of the workforce and giving up looking for jobs, but analysts also pointed out that this was likely to the 7.5K increase in the size of the labor force during the month.

Overlay of AUD Pairs: 15-min Forex Charts
Overlay of AUD Pairs: 15-min Forex Charts

With that, it’s no surprise that the Aussie returned most of its gains for the rest of the day (except against the euro) as traders got wind of underlying weaknesses in terms of full-time employment.

What’s expected this time?

  • January employment change at 15.2K
  • January unemployment rate to hold steady at 5.0%

A slower pace of jobs growth is expected for the first month of 2019, likely reversing most of the holiday hiring from December last year. If this is accompanied by yet another decline in full-time employment, the Aussie might not even stand a chance against its peers.

Leading indicators for January have a few more clues:

Some analysts are wary of even weaker employment on account of economic uncertainties surrounding the Federal Election and the moderating housing momentum in New South Wales and Victoria.

It’s also worth noting that four out of the last five releases have printed stronger than expected results, with the September 2018 figure enjoying an upgrade after an initially downbeat read.

One thing to always remember when trying to trade this report is that AUD pairs might be prone to a knee-jerk reaction to the headline readings, only to reverse (or maybe sustain) those moves as traders dig deeper into the underlying data. Don’t say you haven’t been warned!