Australia’s employment change is expected to rise 20.0K in January after climbing 23K the previous month. At the same time, the unemployment rate is estimated to remain unchanged at 5.0 percent. Indeed, a dismal release could place additional weight on the AUDUSD as the worst flood in 50 years paired with the recent cyclone and forest fires dampen the region’s economic outlook.
Ahead of the release, job advertisements in January rose 2.4 percent to mark the highest level since November. The reading bodes well for Australia as it points to robust hiring. Aside from the upbeat picture that job advertisements and economists’ expectations are painting, currency traders should caution a sharp selloff in the aussie on the back of a dismal labor force report as the economy is at risk of facing a contraction. Recently, Australia’s Treasurer Wayne Swan said that, in the short term, Australia’s economy may be disrupted by floods and a cyclone. As the recent effects dampened business growth, I do not rule out the results negatively spilling over onto the employment sector. All in all, a better than expected report will validate the bullish technical outlook. On the other hand, a disappointing release could set the stage for a reversal in the overvalued Australian dollar.
Technical Outlook AUDUSD: Taking a look at the hourly chart, the pair remains supported by 1.011. This level is of particular interest due to the fact that price action tested this area approximately 4 times. Unless price action dips back below 1.011, currency traders should caution further gains as our speculative sentiment index stands at -4.0 and signals for additional gains. AUDUSD 1 Hour Chart
Charts Created Using FXCM’s Strategy Trader – Prepared by Michael Wright
By Michael Wright, Currency Analyst at FXCM. For More Technical-Analysis Visit the DailyFX Technical Page