On Thursday at 1:30 am GMT Australia will publish its labor market numbers for the month of March.
In case you were too busy making your own sourdough bread, you should know that traders have been looking at labor market data for clues on how far the economy has to go to return to its pre-Coronavirus levels.
Here are points you need to know if you’re planning on trading the event:
Labor market numbers were positive all around in February
- A net of 26,700 jobs were added, more than the 10,000 increase expected
- January’s figures were downwardly revised from 13,500 to 12,900
- Full-time employment went up by 13,300 while part-time jobs rose by 7,800
- Unemployment rate dropped from 5.3% to 5.1%
- Labor force participation rate dipped from 66.1% to 66.0%
AUD fell despite the upside surprisesAt the time, traders were more interested in the Reserve Bank of Australia (RBA)’s policy announcement scheduled just three hours after the jobs report.
And, unfortunately for Aussie bulls, Governor Lowe and his team had decided to cut their interest rates for the second time in a month AND launch its own QE program. Talk about having a busy day!
The Aussie ended up making new intraweek lows against its major counterparts and didn’t come up for air until the next trading session.
Traders are expecting much weaker numbers in March
- There could be a net job loss of about 30,000 to 40,000
- Unemployment rate might jump from 5.1% to 5.5%
- Participation rate is expected to slip further from 66.0% to 59.9%
A couple of leading indicators support the weak estimates. AIG’s services index, for example, fell to its March 2009 lows as the coronavirus pandemic hit hospitality, retail, transport, recreation, and even community services.
AIG’s construction index mirrored the concern, as it fell to its lowest since May 2013 on the back of slower activity in building sites and uncertainty for businesses.
AIG’s manufacturing index showed the most promise, as consumer stockpiling boosted activity and maybe hiring.
Last but not the least is ANZ’s job ads data, which fell by another 18.2% – the largest since January 2009 – after already dropping by 10.3% in February.
AUD could lose some of its gains from the previous weekRecall that comdolls like the Aussie had gained pips last week on the back of optimism over peaking cases around the globe as well as the aggressive stimulus measures from major governments.
If Australia’s numbers print much weaker than the markets’ already low expectations, then we could see the Aussie lose some of its shine.
Already the comdoll is seeing red against some of its counterparts:
If we see much fewer job losses, however, or if traders maintain their risk-friendly mood from the previous week, then AUD could extend its gains across the board.