Tuesday, July 5, 2011

Australia (AU) Employment Change - July 6, 2011

Australia Employment Change is similar to U.S. NFP (Nonfarm Payroll) and Canada Employment Change, this is an economic indicator for the Employment Changes in Australia, here´s the forecast:

9:30pm (NY Time) AU Employment Change Forecast 15.3K Previous 7.8K
AU Unemployment Rate Forecast 4.9% Previous 4.9%
ACTION: AUD/USD BUY 45.0K SELL -15K



The Trade Plan


The deviation that we are looking for is at least of 30K. Historically a 25K~30K of difference has produced about 40~50 pips of movement in the direction of the difference about 75% of the time. Expect to see the effect of this news to last minimum 45 minutes to 2 hours; typical news effect should last under 2 hours. One other important news to pay attention to is the Unemployment Rate, which is expected to stay unchanged at 4.9%. If we don´t get a conflict with the Employment Change, then we will proceed with the trading plan.
We´ll look to trade this using after news retracement trading method, we´ll wait for the market to retrace and stay out of the market during the release time. If we get a 45K of release, our bias will be to BUY AUD/USD; if we get a -15K of release, our bias will be to SELL AUD/USD. We´ll only enter after we see a decent retracement from the initial spike.

The Market


RBA decided to keep rates unchanged at 4.75% yesterday citing various reasons, including slow job growth among other reasons. With recent Retail Sales release disappointing, we may get an inline to a weaker than expected release, in my opinion.

At any rate, AUD still has the best yield at 4.75%, and strong sell-offs in AUD will be countered by a rally at support, therefore use caution when selling the AUD.

Additional Thoughts

AUD may not retrace much during lower liquidity hours, therefore we may have to get in as soon as possible on a strong release.

Pre-news Considerations

There are no pre-news consideration for this trade.

DEFINITION


"Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation´s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP."

Thanks,








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