Aussie eyes employment report before RBA minutes next week – Forex News PreviewPosted on June 13, 2018 at 12:36 pm GMTMelina Deltas, XM Investment Research Desk
Australia’s employment report for May is likely to attract investors’ attention and is scheduled for release on Thursday at 0130 GMT. The unemployment rate is forecasted to tick lower to 5.5% for the month of May from 5.6% in the preceding month, while the employment change is expected to show that the economy added 18,000 jobs, 4,600 jobs less than the previous month. Meanwhile, the participation rate is predicted to remain unchanged at 65.6%.
The nation’s seasonally adjusted unemployment rate unexpectedly edged up to 5.6% in April from 5.5% in the prior month. It is the highest jobless rate since last July, even though the economy added 22,600 jobs. Despite that the number of unemployed increased by 10,600. Moreover, the labor force participation rate increased to 65.60% in April from 65.50% before, as more people entered the workforce. However, weaker releases in the coming months could push the RBA to be neutral for a longer period.
Turning to monetary policy, on June 19 the Reserve Bank of Australia (RBA) will publish the minutes of its last meeting that took place on June 5. The RBA left the cash rate unchanged at a record low of 1.5%, as widely expected. Policymakers referred that the Australian economy is predicted to advance a bit above 3% in 2018 and 2019, supported by positive business conditions and rising non-mining investment, while consumer prices are likely to remain low for some time. Inflation rose by 1.9% through the year to the March quarter, the same as in the previous quarter. Additionally, the economy grew an annual 3.1% in the first quarter of 2018, following a 2.4% expansion in the prior quarter and above expectations of a 2.8% growth. It is the fastest annual growth rate since Q2 of 2016.
In the previous week, on June 7, senior officials from Australia’s Department of Foreign Affairs and Trade met representatives from the foreign ministries of India, Japan and the US in Singapore. The officials continued discussions on promoting an open, inclusive and prosperous Indo-Pacific where all countries respect the sovereignty and international law, freedom of navigation and overflight, and sustainable development. The revival of the Quadrilateral Security Dialogue, aimed at curbing China’s influence in the region, risks further damaging already strained relations between Canberra and Beijing. China is Australia’s biggest export destination and worsening relations could harm Australia’s export-dependent miners.
Having a look at aussie/dollar, in the medium-term, the price completed three consecutive green weeks, with low volatility after the rebound on the 0.7410 support level on May 9.
A worse-than-expected figure could create a downward pressure for the pair and would retest the 0.7475 support level in the daily timeframe. In case of a penetration of this area, the bullish retracement could come to an end and hit the 11-month low of 0.7410. The next support is coming from the 0.7325 barrier, taken from the low on May 2017.
If the employment report surpasses the consensus, then the price could create a rally until the 0.7675 strong resistance level in case of a jump above the 23.6% Fibonacci retracement level of the downleg from 0.8135 to 0.7410, around the current market price of 0.7585. Slightly above this area, the price could meet the 38.2% Fibonacci near 0.7690. In addition, a break above the aforementioned obstacle could open the door towards the next immediate resistance of the 50.0% Fibonacci of 0.7770.AUDUSDforex
Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.
It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.
CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.