- Australia’s unemployment rate is forecast to rise to 4.8% in September.
- The RBA considers that the setback in the economic recovery due to the Delta variant is only temporary.
- AUD / USD bulls are targeting 0.7420 in hopes of a labor market rally by the end of the year.
The Australian labor market is expected to lose more jobs in September, the latest employment report to be released by the Australian Bureau of Statistics will show on Thursday.
Risks remain skewed to the downside for all employment indicators, as the lockdowns induced by the outbreak of the Delta variant of covid that were imposed around July lasted well into September.
Employment data will paint a bleak picture
After the terrible employment data for August, Australia’s economy is expected to have lost another 120,000 jobs in September. The unemployment rate is expected to rise to 4.8% from the 4.5% seen previously. The participation rate is projected to drop sharply to 64.7% last month compared to the previous figure of 65.2%. In August, the Australian economy saw a strong job loss of 146,300, erasing the previous three months of gains.
Source: FXStreet
In its October monetary policy decision, the Reserve Bank of Australia (RBA) kept its monetary policy setup unchanged, with the official cash rate (OCR) unchanged at an all-time low of 0.10%.
Nevertheless, the RBA presented an optimistic outlook on the economy in the last quarter of 2021, citing that “the setback to economic expansion in Australia is expected to be only temporary.”
“Vaccination rates rise further and restrictions are eased, the economy is expected to recover. The economy will grow again in the December quarter, ”the central bank explained in its monetary policy statement.
Meanwhile, Australia’s Bureau of Statistics said last week that payroll jobs fell 0.7% in the fortnight to September 11, after a larger 1.5% drop in the previous two weeks. The ANZ job announcements for September posted a third consecutive monthly decline, suggesting an increase in the unemployment rate in the coming months.
However, the country’s NAB business confidence index shot up sharply in September as companies remained optimistic when New South Wales (NSW) and Victoria announced plans to reopen.
AUD / USD Likely Scenarios
The pair AUD/USD has stopped its uptrend near 0.7385 ahead of critical US inflation data and Australian employment figures. US data and FOMC minutes will set the tone for the markets in the coming weeks, having a significant impact on broader risk sentiment and ultimately risk-sensitive currencies like the Australian dollar. .
Therefore, the AUD / USD reaction to the Australian employment report could be influenced by the lingering risk tone. Furthermore, markets have already appreciated the significant loss of jobs in Australia in September, and expect a rebound in the labor market by the end of the year. That said, even a slightly bullish figure could help to intensify the bullish undertone in the Aussie, triggering a big breakout in the nine-week symmetrical triangle pattern on the daily chart.
The RSI is holding firmer, well above the center line, adding credibility to a possible upward move. A sustained break above the triangle could lead buyers to challenge the bearishly sloping 100-day moving average at 0.7420.
On the other hand, a major disappointment in the Australian data combined with risk-off sentiment could reverse the recent rally in the currency pair, with a test of the horizontal SMA 50 at 0.7305 on the table. The next relevant support is seen at the slightly bearish 21 SMA at 0.7280.
– .
