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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 February. Better mark your calendars for March 21, 12:30 am GMT.

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?

  • January employment change up 39.1K vs. 15.2K expected
  • December 2018 employment change downgraded from 21.6K to 16.9K
  • January unemployment rate unchanged at 5.0% as expected
  • January labor force participation rate up from 65.6% to 65.7%

The Land Down Under posted yet another upside surprise in headline jobs figures to start off 2019, printing an impressive 39.1K increase in employment versus the projected 15.2K gain in January.

This was enough to keep the jobless rate steady at 5.0% – its lowest rate in seven years – as expected even as the labor force participation rate ticked higher to 65.7%. A closer look at the components of the report reveals that full-time hiring advanced by 65.4K while part-time employment fell by 26.3K.

With that, it’s safe to say that the January jobs figures turned out much better than the December 2018 report, which actually saw a downgrade to just a 16.9K increase in hiring.

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

But wait! What is up with that nasty selloff?

AUD pairs had an initial strong bullish reaction to the release, but this move was short-lived as sellers almost immediately took over and stayed in control for the entire day.

As it turned out, the drop was spurred by Westpac’s prediction that the RBA would likely cut the official cash rate later this year on account of weaker growth and lukewarm inflation.

What’s expected this time?

  • February employment change at 15.2K vs. 39.1K previous
  • February unemployment rate to still hold steady at 5.0%

A slower pace of jobs growth is expected for the month of February, possibly pulling back from the strong surge early in the year. Still, this should be enough to maintain the jobless rate at 5.0% for yet another month.

  • The employment component of the AIG services index is up 1.8 points from the January figure to 49.3, still indicating contraction but at a slower pace.
  • The employment component of the AIG manufacturing index posted an even more impressive 6.6-point gain to 57.7 to signal a faster pace of growth.
  • The employment component of the AIG construction index is up 1.6 points to 46.0, also indicating contraction.

It’s a mixed bag for the leading indicators, with construction and services signaling a slower pace of contraction and manufacturing showing a faster pace of hiring for the month.

On an upbeat note, keep in mind that the ABS has been printing stronger than expected results for four out of the last five months, so there may be a chance for another upside surprise.

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.

Also, be mindful of any monetary policy chatter or lending rates adjustments by Australia’s big banks and lending institutions as these could overshadow the impact of economic data. Don’t say you haven’t been warned!