Another 20.0K expansion in Australia Employment report may stoke a larger recovery in AUD/USD as it puts pressure on the Reserve Bank of Australia (RBA) to lift the cash rate from the record-low.

A positive development may push Governor Philip Lowe and Co. to adopt an improved outlook at the next meeting on September 5 as ‘various forward-looking indicators point to continued growth in employment over the period ahead.’ In turn, the shift in AUD/USD behavior may continue to unfold in the second-half of 2017 should the RBA gradually alter the monetary policy outlook over the coming months.

However, a dismal employment report may dampen the appeal of the Australian dollar as it encourages the RBA to carry the record-low cash rate into 2018.

Impact that Australia Employment report has had on AUD/USD during the previous print

June 2017 Australia Employment

AUD/USD 5-Minute Chart

The Australian economy added another 14.0K jobs in June, while the Unemployment held steady at an annualized 5.6% for the second month even as the Participation Rate unexpectedly climbed to 65.0% from 64.9% in May. A deeper look at the report showed a 62.0K expansion in full-time employment, while part-time positions narrowed another 48.0K during the same period. Nevertheless, the initial market reaction was short-live, with AUD/USD pulling back from 0.7988 to end the day at 0.7955.

Bullish AUD Trade: Australia Adds Another 20.0K Jobs or More

• Need a green, five-minute candle following the report to favor a long AUD/USD position.
• If the market reaction favors a bullish aussie trade, buy AUD/USD with two separate lots.
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to breakeven on remaining position once initial target is met, set reasonable limit.

Bearish AUD Trade: Employment Report Fails to Meet Market Expectations

• Need a red, five-minute candle to favor a short aussie position.
• Implement the same setup as the bullish AUD trade, just in reverse.

Potential Price Targets For The Release

AUD/USD Daily Chart

(Click on image to enlarge)

• AUD/USD may continue to retrace the decline from earlier this month as the pair clings to channel support and pushes to a fresh weekly high of 0.7925; the Relative Strength Index (RSI) appears to be highlighting a similar dynamic as it threatens the bearish formation carried over from the previous month.
• In turn, a move back above the 0.7930 (50% retracement) to 0.7940 (61.8% retracement) hurdle may open up the next region of interest around around 0.8020 (38.2% retracement) followed by the 2017-high at 0.8066.
• Interim Resistance: 0.8270 (38.2% retracement) to 0.8295 (2015-high)
• Interim Support: 0.7720 (23.6% retracement) to 0.7740 (78.6% expansion)

AUD/USD Retail Sentiment

Retail trader data shows 30.8% of traders are net-long AUD/USD with the ratio of traders short to long at 2.24 to 1. In fact, traders have remained net-short since June 04 when AUD/USD traded near 0.74551; price has moved 6.2% higher since then. The number of traders net-long is 12.8% lower than yesterday and unchanged from last week, while the number of traders net-short is 16.0% higher than yesterday and 4.3% lower from last week.