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It’s time for yet another event preview as the Land Down Under gears up to release its jobs report for the first month of 2021!

What are traders expecting and how can you trade the event on Thursday at 12:30 am GMT?

Here are a few points to remember when making your trading plans:

December’s numbers reflected the employers’ optimism

  • December employment change: +50K as expected
  • Both full-time (+35,700) and part-time (+14,300) employment saw gains
  • December unemployment rate dipped from 6.8% to 6.6%, the lowest since April 2020

December was a good month for Australia’s labor market, as the government’s handling of COVID-19 infections inspired consumers to go out and spend moolah and employers to speed up their hiring.

Net job creation matched the market’s expectations while the unemployment rate also dropped despite a higher participation rate among jobseekers.

AUD 15-Min Chart Overlay
AUD 15-Min Chart Overlay

The positive report, along with a risk-friendly trading environment, helped boost the Aussie near its intraday highs after the numbers were released.

What are markets expecting this week?

  • Australia could see another +30K net job creation in January
  • The jobless rate could further dip to 6.5%
  • Labor force participation rate is seen remaining at 66.2%

Will employers keep hiring in January? Analysts say yeah, but probably not as aggressively as they did in December.

AIG’s purchasing managers’ index (PMIs) data would normally give us clues, but their January numbers are tied up with December’s this time so we gotta take their optimism with a grain of salt.

In any case, the manufacturing PMI noted “stronger and more broad-based recovery” with five out of six sectors reporting positive conditions.

Meanwhile, stimulus bombs for the construction sector helped lift new orders to its highest since March 2018. Heck, job creation was so strong that the rise of construction-related activities like logistics and property services helped boost even the services PMI!

All is also good in the hood for ANZ’s job ads, which noted another 2.3% increase in January. While it’s slower than December’s 8.6% uptick, it was enough to push job ads to its highest since April 2019 and to an annual pace that’s faster than its pre-pandemic levels.

Meanwhile, NAB’s January business survey noted some easing from December’s optimistic employment conditions but also shared that indicators still “point to an ongoing recovery.”

So, while the labor market could continue to strengthen in January, we might see some pullback from November and December’s beast-level numbers.

How can the report affect AUD’s weekly trends?

Optimism over vaccinations, stimulus, and rallies in other major assets has been making pips rain for the Aussie bulls so far this week.

AUD's 7-Day Performance
AUD’s 7-Day Performance

If Australia’s jobs numbers point to continued labor market recovery, then we could see the Aussie extend its gains against its counterparts (it hasn’t hit its average weekly volatility over the last month).

AUD Average Volatility
AUD Average Volatility

But if we see a much bigger pullback in hiring, then traders could remember that Victoria has imposed a “circuit breaker” lockdown and that recovery could take longer than they had priced in.

Oh, and keep an eye out for the FOMC meeting minutes released just five hours before the event, which could influence the overall risk-taking mood and affect AUD’s trends beyond Asian session trading.