Australia Employment Change is similar to U.S. NFP (Nonfarm Payroll) and Canada Employment Change, this is an economic indicator for the Employment Changes in Australia, here’s the forecast:
9:30pm (NY Time) AU Employment Change Forecast 25K Previous 23/5K
AU Unemployment Rate Forecast 5.2% Previous 5.3%
ACTION: AUD/USD BUY 55K SELL -1K
The Trade Plan
The deviation that we are looking for is at least of 30K. Historically a 25K~30K of difference has produced about 40~50 pips of movement in the direction of the difference about 75% of the time… Expect to see the effect of this news to last minimum 45 minutes to 2 hours… typical news effect should last under 2 hours. One other important news to pay attention to is the Unemployment Rate, which is expected to drop to 5.2% for last month’s surprise 5.3% release. If we do not get a conflict with the Employment Changes, then we will proceed with the trading plan.
We’ll look to trade this using after news retracement trading method, we’ll wait for the market to retrace and stay out of the market during the release time. If we get a 55K of release, our bias will be to BUY AUD/USD; if we get a -10K of release, our bias will be to SELL AUD/USD. We’ll only enter after we see a decent retracement from the initial spike.
The Market
Australian Employment Change release is considered as a high impact report as the job’s market has direct influences over the entire economy, which in turn affects inflation, and inflation will affect future RBA monetary policy.
AUD has been on the rise and maintaining strength on the back of the better than expected q/q GDP release last week. If this release surprises to the downside, it would change the short-term bullish sentiment of AUD into somewhat bearish, and we should be looking for a SELL at the current level above 0.9100.
Additional Thoughts
AUDUSD correlates with risk sentiment, therefore on a mostly risk aversion driven market (last 2 days), AUDUSD could really suffer from a worse than expected release, therefore I wouldn’t be surprised to see a test below the 0.90000 if we get a relatively bad release. However, if we get a much better release, AUDUSD could make an attempt above 0.92000, where I’d be looking to SELL into the rally from a longer term view.
Pre-news Considerations
There are no pre-news consideration for this trade.
DEFINITION
“Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation’s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP.”
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{ 5 comments… read them below or add one }
Yes you’re right, I prefer the long term solution, now it drilled back to just -9 pips (when I wrote this), I hold until +200 pips to 0.9018 then take profit, do you agree with me, Henry?
That would be an excellent target for TP.
We’ve got moderate release but AUD/USD hike about +40 pips just after release, unfortunately I can’t access forexfactory for the release (web error) so I was too late to enter, and then I just wait for spike, after it reached 0.9218 (your opinion: You’d be looking to SELL into the rally from a longer term view.), so I put SELL AUD/USD, and then waiting till now already -36 pips (when I wrote this), what do you think, I hold or cut loss, Henry?
cut your losses should be the right move. But from a longer term of view, I wouldn’t mind holding on to it.
Thanks Henry for your detailed and insightful analysis. It’s a great call and i’ll be staying awake in wait to trade this release. The analysis on USD/CAD is doing pretty well at the moment and I hope this one too can hit the trigger on either sides.
Thanks and PLEASE keep on with the good work of helping humanity.
God BLESS your and your entire home.