Aussie jobs preview - what to expect in AUD/USD?

AUD/USD was smashed on the FOMC numbers as more fuel to bears the fire while the Aussie has a bad run of things recently. The RBA cutting rates, adjustments to the inflation forecasts by -1% and now a Fed hike in June on the table by the sounds of the minutes. Today is crucial for the Aussie with the key jobs data.

Aussie on backfoot post surprise hawkish FOMC minutes

FOMC minutes: June hike 'likely'

AUD/USD has been mostly stable after the sell-off from 0.7291 when it dropped to 0.7215 on the FOMC minutes. US rates jumped on these minutes of the Fed's 26/27 April meeting where most members were in favour of a hike in June where a hike was stated as being “likely” if the Q2 data improved. “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.”

Aussie jobs to support or add more fuel to the bears fire?

Analysts at Westpac noted that the Australian April employment is out at 11:30am Syd/9:30am Sing/HK. Westpac is expecting -5k. The analysts said that this would still see the annual pace of employment rise modestly to 2.1%. Their forecast is at the bottom of the -5k to +38k range (median +12k).

"While our Jobs Index is pointing to strong employment growth as we head into the Sep quarter, we feel that the soft patch in employment will continue for now with the election looming. Mar was mixed with employment rising, but unemployment lower on softer participation rate. We were surprised that the participation rate was unchanged in March at 64.9% given ABS comments about issues with sample rotation," explained the analysts who added, "In Apr, we see the risk of the participation rate dipping to 64.8% (median 64.9%). This would see the unemployment rate tick up to 5.8% from 5.7% (in line with consensus)."

AUD/USD key levels to monitor

The AUD/USD broke below the 200 day ma at 0.7257 after the FOMC minutes. This is a key level and the low has got into a handful of pips away from the 0.7213 level (61.8% retracement). A break there is going to expose the 16th Dec lows of 0.7096 as a credible target on bad data.

On the upside, there is the 200 dma then the 100 dma at 0.7337. A break of there opens 0.7402 and the 10th May high ahead of where analysts at Commerzbank suggested rallies should terminate, circa 0.7430/0.7530. "Initial resistance lies 0.7477 (24th March low). The market remains negative while below 0.7717, the 3rd May high."