Aussie jobs (with a twist) preview - how will AUD be affected?

Aussie jobs overview (May)

Australia's monthly jobs report is back on the cards for Asian markets today. The report will be released at 0130 GMT. The employment change is expected to be positive by 10K and the unemployment rate at 5.7%. 

However, today's report might be of even keener interest to markets than previous and offer more potential for traders. After two strong months of job growth in March and April, economists expect the pace of hiring to cool in May. However, as a twist for today's jobs report, we also get ABS's quarterly underemployment figures. This will offer markets an update on the degree of labour market slack that exists within the economy at present. There is an emphasis on wage growth and inflationary pressures and markets will factor this into the outlook for interest rates. 

How could the data affect AUD/USD?

The key to today's data will be behind the scenes and headlines will not be the only factor that traders will be scrutinising and taking positions upon. As mentioned above, subsequently, today's release has the potential to exaggerate moves in AUD/USD depending on the outcome. Look out for total hours worked because that was something the RBA drew attention to in its June monetary policy statement, saying that while employment growth had “been stronger over recent months, growth in total hours worked remains weak”.

Therefore, watch underemployment in the ABS report because this largely captures a population working part-time but who would like to work more hours, and that is one area where the RBA sees slack in the labour force - It stood at 8.7% when last released three months ago and matched a record set in August 2016. Should this number be lower, that would be a positive for the Aussie looking for space in the 0.76 handle and 0.7635 recent highs. 0.7680 is a key target as 30th May highs. To the downside and no improvement in hours or, indeed, a miss in expectations would weigh the Aussie down with a target below the 0.75 handle on a break of 0.7520 (previous resistance double top and recent support of channel).

Key notes

AUD/USD: Looking to sell into strength above 0.7600: "Looking to sell into strength above 0.7600, with a SL placed above 0.7650 may be a plan," - Jim Langlands.

Valeria Bednarik, chief analyst at FXStreet explained that intraday technical readings favor an upward extension, give that in the 4 hours chart, indicators have stabilized within positive territory after correcting overbought conditions, whilst the price remains well above a bullish 20 SMA.

About the Employment Change

The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).