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 September, due out at 12:30 am GMT, October 15th.
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?
- August employment change: 111.0K vs. -35.0K consensus
- July employment change upgraded from 114K to 119K
- Aug. unemployment rate fell from 7.5% to 6.8% vs. 7.7% estimate
The August headline figures surprised big time, 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 114K to 199K. This was surprising as the report cover the time period during Melbourne’s Stage 4 restrictions to contain the pandemic outbreak.
A closer look at the underlying figures reveals that part-time workers returned at a faster pace than full-time workers, fueled by delivery services which understandably became more in demand as citizens were once again confined to their homes.
We also saw the participation rate rise to 64.8% versus an expectation a slide to 64.6%, another positive sign of the economy is slowly getting back on track.
With those numbers, it was a bit surprising that the Aussie could not rally higher, likely a function of currency traders focusing on the Federal Reserve and its lack of increasing simulative measures during its monetary policy statement a few hoursprior to the jobs release.
What’s expected this time?
- September employment change may see a net decline of 40K
- September unemployment rate to rise to 7.0%
A slower pace of jobs growth is expected for September 2020 as business conditions likely contracted at a faster pace due to ‘Stage four’ activity restrictions in response to rising COVID-19 cases, according to the latest PMI reports
Leading indicators from those September PMI reports have a few more clues:
- The AIG performance of manufacturing index fell by 2.6 points to 46.7 points in September (seasonally adjusted).
- The AIG performance of services index fell by 6.3 points to 36.2 points in September 2020 (seasonally adjusted).
- The AIG performance of construction index improved by 7.3 points to 45.2 points in September (seasonally adjusted)
- Australian job advertisements rise 7.8% in September – ANZ
IHS Markit Australia Services PMI – Employment
contracted for the eighth time in consecutive months, with
the rate of decrease the fastest since May.
And with no macro / geopolitical events scheduled around the Aussie jobs number, we could see a direct reaction in the Australian dollar to the latest release. China will be releasing their latest inflation data not too long after the Aussie jobs numbers, but it’s a low probability of an outsized market reaction.
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 forget to check out the revisions to previous numbers, and the participation rate for a better understanding of the employment situation.