Traders' TV Show for tonight: Australian Employment Data
At 2:30 am London/8: 30 pm New York time, the Australian Bureau of Statistics will be releasing Jul’s employment change. Investors are going to be closely following the report as the numbers can signal the magnitude of the next cut.
The Dovish RBA is very optimistic regarding growth projections, that's why anything below expected will generate significant volatility. The Reserve Bank of Australia did not alter the rates on its August meeting, but at least two more cuts are expected this year.
Aussie’s traders know that low rates are here to stay and that's why many investors are trying to dissect every small piece of data to evaluate the impact of the decision. The RBA is placing all its attention in the labour market, using wages as the main catalyst to control inflation and boost consumption.
A dovish policy should have an impact on employment throughout the channel of spending and investments. If there is an expansion in production and output in general, there should be an expansion in employment. However, please bear in mind that full effects of a rate cut are not automatic, but rather requires months to see real changes.
Now, all comes down to the numbers. If numbers come negative, the additional easing will be the way to go for the RBA. Employment is expected to come at 14.2K, compared with a 0.5K in July. The unemployment rate, on the other hand, is projected to remain the same. The participation rate, on the other hand, which is a key indicator of the supply of labour, is also forecasted at around 66%, the same figure of last month.
Better than expected data can push the Aussie higher, which enters in congruence with am important monthly and daily support zone.