Australian Employment Preview: AUD/USD to drop to last week low at 0.7220 on a dismal report

Australia’s labor market recovery is seen slowing in October, the latest employment report, due to be published by the Australian Bureau of Statistics (ABS) on Thursday at 00:30 GMT will show. Job losses could reinforce the Reserve Bank of Australia’s (RBA) negative rate calls and send AUD/USD to the last week low of 0.7220, FXStreet’s Dhwani Mehta informs.

Key quotes

“After a modestly upbeat September month employment data, the OZ economy is expected to have lost 30K jobs in October. The Unemployment Rate is foreseen at 7.2% from 6.9% booked in September, the weakest in three months. The Participation Rate is seen a tad lower at 64.7% last month when compared to the previous figure of 64.8%.”

“A positive surprise to the employment numbers could alleviate the pressure off the RBA to do more, in terms of additional asset purchases, in another effort to stimulate the economic recovery.”

“Though the central bank has downplayed expectations of negative interest rates, a disappointment in the jobs data could likely steer the RBA in that direction. In such a scenario, AUD/USD could drop towards last week’s low of 0.7220, below which the 21-daily moving average (DMA) support at 0.7186 could be put at risk.” 

“An upside surprise in the data combined with a favorable risk sentiment could prompt the bulls to takeout the critical horizontal trendline resistance at 0.7340, opening doors towards 0.7400.”