Trading Guide: Australia’s Jobs Report (May 2022)

This week is not just packed with central bank events!

There are also tons of top-tier reports scheduled for release including Australia’s monthly labor market data scheduled on Thursday (June 16) at 1:30 am GMT.

Planning on day trading the report? Here are points you need to know first:

What happened last time?

  • Unemployment rate remained at decades-low of 3.9% as expected
  • Net employment up by 4K vs. 30K increase expected
  • Participation rate edged lower from 66.4% to 66.3%

Australia’s labor market strengthened for another month in April as the unemployment rate remained at 3.9% even when the participation rate edged down from 66.4% to 66.3%.

Net jobs increased missed market expectations, but a closer look showed full-time employment rising by 92.4K and offsetting the 88.4K loss in part-time jobs.

A bump in full-time work is good for the economy because it points to steadier and maybe higher spending power for increasing consumers who are already dealing with consumer prices.

AUD 15-Minute Forex Charts

The (mostly) positive report boosted AUD to new intraday highs until the end of the Asian session when the major AUD pairs moved to the beat of overall risk sentiment.

What are traders expecting this time?

  • Jobless rate to dip from 3.9% to 3.8%
  • Net employment increase of 20K to 25K
  • Participation rate to steady at 66.3%

Analysts expect Australia’s labor market to improve further in May. Net job creation could improve from 4K to about 20K to 25K while the unemployment rate may dip lower from 3.9% to 3.8%.

In its June statement, the Reserve Bank of Australia (RBA) already penciled in further declines in unemployment and underemployment, and shared that wages could grow further as firms compete in a tight labor market.

RBA also emphasize that it’s “paying close attention to these various influences on consumption” to figure out the “appropriate” monetary policy setting.

So, stronger-than-expected numbers (read: more income for potential consumers) would allow the Reserve Bank of Australia (RBA) to continue or even step up its tightening measures. This could mean sharper interest rate increases or a longer period of continuous interest rate hikes until the “appropriate” setting is achieved.

If this week’s figures come in much higher than markets had expected, then AUD could gain pips against its major counterparts… at least until the US session.

That’s right! Don’t forget that the most closely-watched event – ​​the FOMC statement and presser – is scheduled a few trading sessions later.

If you’re planning on trading AUD during the jobs report, then you gotta make sure that you’re either out or covered for when the Fed drops its decision.

Not sure which AUD pair to day trade during the event? Check out AUD’s short and long-term trends or the major AUD pairs’ average volatility for clues!

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