When is the Australian employment report and how could it affect AUD/USD?

July month employment statistics from the Australian Bureau of Statistics, up for publishing at 01:30 GMT on Thursday, will be the immediate catalyst for the AUD/USD pair traders. The figures become important after the recent weakness in the Aussie Wage Price Index for Q2 2021 and extended local lockdowns in Australia.

Market consensus favors Employment Change to drop from 29.1K previous readouts to -46.2K on a seasonally adjusted basis whereas the Unemployment Rate is likely to rise from 4.9% to 5.0%. Further, the Participation Rate may also slow down from 66.2% to 66.0%.

TD Securities expect a mixed data while saying,

With Sydney in a full month of lockdown while Victoria and South Australia entered and exited snap lockdowns in July, July's Employment print will represent the first test of the RBA's upbeat outlook. We expect headline employment to rise by 10k (mkt: -30k, Jun: +20k), contrary to consensus that the labor market will take a hit in July. Our labor market model based on weekly payroll data didn’t project a significant decline in employment in July while labor market demand has been firm, evident from a 0.5% m/m decline in job ads. Additionally, federal and state support could have buffered the hit to the labor market as the adjustment occurs through hours worked instead of job losses. Thus, we expect a slight dip in participation rate to 66.1% (Jun:66.2%), driving unemployment rate lower to 4.8% (Jun: 4.9%). If our forecasts are right, this could boost the RBA's confidence that the recent lockdowns are only "interrupting the recovery" and the labor market remains resilient in the face of tighter state-level restrictions.

Additionally, analysts at Westpac said,

Westpac expects a 20k rise in Australia July employment, with Sydney’s lockdown-lite restrictions reflecting more pressure on hours worked. The ABS Weekly Payrolls fell -2.4% in the two weeks to 17 July, compared to a revised –0.2% for the fortnight ending 3 July. Payrolls are not seasonally adjusted; they measure only people paid in the week so those working zero hours but still employed are not counted. Our +20k forecast in the official survey is a flat print in original terms. With flat participation (WBC f/c: 66.2%), this would see the unemployment rate edge down to 4.8%. Such an outcome would be a considerable surprise to the market – while there is a wide range of forecasts (-90k to +50k), the median is -43k on jobs, 5.0% unemployment rate.

How could the data affect AUD/USD?

AUD/USD remains pressured around 0.7230, down for the fourth consecutive day while teasing November 2020 levels touched the previous day ahead of the data release.

Given the RBA policymakers’ acceptance of covid woes as a major challenge to their previous economic optimism, coupled with Wednesday’s downbeat Wage Price Index, today’s employment data may hint at the further delay in the monetary policy tightening. The same should weigh on the AUD/USD if the jobs report for July matches downbeat forecasts.

Even if the employment figures offer a positive surprise, which is less likely considering the virus-led restrictions, only a knee-jerk upside reaction is expected amid a jump in the infections at home and the latest fears among the RBA policymakers.

Technically, AUD/USD sellers’ rejection to respect October 2020 high as a support, around 0.7245, highlights the mid-November bottom surrounding 0.7220 and the October 23 top of 0.7180 as important supports. Meanwhile, July’s low of 0.7288 acts as an immediate important hurdle to watch during the quote’s rebound.

Key Notes

AUD/USD remains pressured near nine-month low above 0.7200, Aussie employment eyed

AUD/USD Forecast: Employment figures could push it sub-0.7200

Australian Employment Preview: A disappointing surprise coming in

About the Employment Change

The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).

About the Unemployment Rate

The Unemployment Rate released by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labor force. If the rate hikes, indicates a lack of expansion within the Australian labor market. As a result, a rise leads to weaken the Australian economy. A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish).