When is the Aussie jobs report and how could it affect AUD/USD?

Overview

Australia will release employment numbers for May at 01:30 GMT on Thursday and forecasts call for a smaller decline in jobs in compared to April. 

The economy is expected to have shed 125K jobs in May following April' 750K decline. Even so, the jobless rate is seen rising to 7% from 6.2%. According to Westpac analysts, the jobless rate is expected to rise due to changes in calculation methodology and a higher participation rate. 

Analysts forecast

Westpac analysts noted in their FX daily note:

Apart from a possible increase in the unemployment rate as a result of the reclassification of JobSeeker/JobKeeper recipients as unemployed, greater participation by workers with children could also see a rise in the unemployment rate now that concerns over COVID-19 are dissipating and as schools and childcare return to more normal conditions.

Meanwhile, analysts at TD Securities think the economy lost significantly lesser jobs in May:

We are expecting 75k jobs to have been lost over the month of May while the participation rate edges up from 63.5% to 63.6%. This sees the unemployment rate lift to 7%, which would represent a deterioration from the prior month at 6.2%, but below estimates for much worse reads anticipated a month or two ago.

Impact on the AUD

The AUD/USD pair is currently trading near 0.6875, having clocked an 11-month high of 0.7064 on June 10. Despite the pullback, the bias remains bullish as the pair is holding well above the 200-day simple moving average (SMA) of 0.663. 

The pair, therefore, could revisit 0.70 if Australia reports a smaller-than-expected decline in jobs. That possibility cannot be ruled out, as the recent weekly jobs data releases have shown that the labor market stabilized in May. 

Also, the downside on the potential weaker-than-expected number may be limited, if the deterioration stems from the changes in the counting method. Key support is 0.6776 (the higher low created on June 15), which, if breached, would confirm a short-term bearish reversal. 

Investors should note that an upbeat data is unlikely to have a material impact on the Reserve Bank of Australia's stance, The central bank's recently released minutes showed that the policymakers intend to keep rates at record lows and retain the three-year yield curve control target until progress is made towards the bank’s goals of full employment and the inflation target. 

Read: Australian Employment Preview: Improvement in the sector, but support needed for years to come

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).