Last night, the Australian Bureau of Statistics said they would revise the oversized jobs gains from last month from 121,000 to 32,100. This sent the AUDUSD lower and has helped make the new employment report for September scheduled for release at 8:30 PM ET/12:30 AM GMT) a wild card for traders.
Although, the market did not really believe the oversized gains last month – as evident by the downward spiral for the AUDUSD in September – the revision announcement (as covered by Eamonn in his posts last night) has traders on edge for tonight’s report. It also has economist scrambling to make adjustments to their estimates. The old estimates were centered around a -30K change in employment. The new estimate is for a +15.5K gain according to Bloomberg.
The Unemployment rate is expected to come in at 6.1%, unchanged from last month. Note, however, that last month the rate fell from 6.4% to 6.1%. There may be a raised eyebrow with regard to that number as well.
If I am not mistaken, the 32,100 may well be revised again. In fact, if you look at the Australian Bureau of Statistics website, they still show the incorrect 121K gain. That is ok. I get they have had a lot of explaining to do. I wouldn’t want to be em.
Australian Bureau of Statistics
In any case, the uncertainty (trust?) now close to 0 (zero), the market is a bit anxious . With trader’s confused, that means Event Risk is also at a high level. When risk is high, traders can choose to take a back seat and let the dust settle (i.e., be square and position after the facts are known). For those with positions – and really for those without one but looking to trade after – the technicals can help with managing risk.
So what are the key levels that traders should eye through the report?
The technical levels to eye through the Australian Employment report.
Looking at the hourly chart above, the price of the AUDUSD surged to and just through the 10-day high trading range off the more dovish FOMC meeting minutes today at the 0.8825-28 area. This has been strong ceiling for the pair in trading over that time period – with a low followed by 4 separate highs on 4 separate trading days.
This area becomes my “bullish above/bearish below” line in the sand for traders post the event. If the price moves higher, we won’t want to see the price move back below this line. Conversely, if the price moves lower, traders should not want to see a reversal back above this line.
Bullish/Stronger Report.
On a stronger report (or lets say a further move higher), the next targets will be eyeing the 0.8896 high from September 24th followed by the 38.2% of the move down from the September 5th high. I would expect that this should give cause for pause as the move would be take the pair up around 110-120 from the days lows. Which on the back of the surge on the Fed, should be good enough to warrant a breather. However, if the push is on for more, the 0.8995 area becomes the next target (see red circles).
Bearish/Weaker Report
On a bearish/weaker report, moving below the “Line in the Sand” will target the 0.8792 area. The midpoint of the surge higher on the FOMC meeting minutes come in there. It is also where the 100 and 200 bar on the 5 minute chart are currently near. A move below will then look toward the 100 (blue line) and 200 hour (green line) moving averages. Those levels come in at 0.8759 and 0.8750 respectively.
Prior to the surge from the FOMC meeting minutes, the AUDUSD was happy to be trading right around that area. They would have been the “Line in the Sand” but the “Fearful Fed” put the kibosh to that idea.
Currency War
With the Fed now throwing their hat in the “I am concerned about the effects of the dollar on the stock market, earnings, inflation, export growth, etc.” the waters are muddy in currency land. Governor Stevens and the RBA wanted the “overvalued” AUD to provide some relief for their economy too. As a result, be on the lookout for rallies toward the extremes to find sellers on the first looks at least, and dips toward the support levels to be bought. I guess the distrust of the economic data might also suggest the same thing.
Good fortune with your trading.
