Australia’s Employment Data Busts Consensus Forecasts

March 15, 2014 in Forex Fundamentals and News

On Thursday, Australia reported that the number of people in employment rose by 47,300 – a number triple that of the 15,000 anticipated by analysts.

Though, the unemployment rate remained stubbornly unmoved at 6%, a ten-year high, the jobs data was one more positive reading from the Australian economy in recent days. It also indicated that jobs growth may be coming out of sectors other than the traditional resource and commodity oriented areas.

Jobs on offer in non-mining sectors

According to Genevieve George, managing director at Oneshift, an online employment-search firm, quoted in an article by the Wall Street Journal, huge increases in jobs activity are being observed in sectors such as hospitality, construction and retail.

Encouragingly, 80,500 full-time job positions were added this week, a far cry from the previous reported figure of 2,700. It may be noted that this was the second-highest gain in full-time positions ever recorded, the first being in August 1991, which saw an addition of 87,000 jobs.

GDP growth

The Australian economy grew a higher-than-expected 2.8%, year-on-year, in the last quarter of 2013.

However, recent data such as the NAB Business Confidence during February (7 versus 9 previous), the Westpac Consumer Confidence during March (-0.7 versus -3.0 previous) and growth in Home Loans during January (0.00% versus consensus of 0.5%) was unimpressive. Consumer Inflation Expectations for March printed 2.1% versus 2.3% previous.

Given that the labour market responds to economic growth by a lag, analysts expect that employment numbers could improve further down the line. Meanwhile, the RBA has indicated it is comfortable with the current benchmark interest rate pegged at 2.5%, as it waits for the investment cycle in the country to recuperate from the recent downtrend seen in capital flows to resource-based industry.

How the jobs number affected AUDUSD

audusddaily-close140314

The positive print on unemployment boosted AUDUSD, as shown in the golden ellipse in the chart above.

However, the pair appears to be facing headwinds from the horizontal line shown in the above chart and marked as ‘neckline.’

It can be observed that AUDUSD has formed a reverse head – and – shoulder pattern on the daily chart above and we need to wait for a convincing break out from this pattern as well as a move above the 200 day moving average shown by the green line in the chart.

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