It would take a crazy brave blogger to make firm predictions about a volatile number like today’s employment statistics. I’m not sure that’s me. I do think though that today’s figure has the potential to be a decent market mover when it”s released at 11.30am.
Aussie Yen looks like one of those charts that could provide short term traders with logical places to put stop entry and profit objectives to position for the possibility of a really bad figure.
Today’s employment number
Today’s number will be released into an environment where opinions are more than usually divided on the outlook for the Australian economy. How much (if at all) is growth likely to weaken as declining mining investment arrives in an environment of fiscal tightenening and consumer caution? Is this the bottom of the rate cutting cycle and is the support for the Aussie Dollar likely to snap at some point if the outlook darkens?
The table below shows job growth for the past 6 months. Average monthly growth of 4,500 is well below the 15,000 needed to employ new entrants to the workforce and the average 35,000 a month in the final 2 years of the major economic expansion ending in 2007. This is reflected in the unemployment rate starting to nudge up to 5.4% from 5.1% in August.
The survey expectation for this morning’s figure is for zero jobs growth in November.
A really weak figure this morning (e.g -20,000 + downward revisions to last month’s figures) would start to look like we may be entering a period of average job losses in Australia. In the current environment this could be a negative trigger for both market and consumer confidence.
A good figure on the other hand might give greater confidence that the Australian economy will muddle through this bad patch with a bit of help from China and the RBA.
AUD: JPY – 4 Hour Chart
I’ve drawn a preliminary triangle formation on the chart below. I’m possibly a bit hasty with the resistance line here because we haven’t really confirmed the 2nd peak.
Even so the support line looks pretty interesting at this stage given overbought oscillators on the higher time frame daily and weekly charts.
A decline from around current levels to break through the triangle support looks like one of those situations that could see a deeper correction unfold.
For short term traders a typical approach would be to place a stop entry order just below the noise of the triangle support with potential split profit objectives at the 38.2% retracement and the 50% retracement which is also close to the 200 period moving average.
An inititial stop loss at resistance above the triangle support line would provide decent risk: reward on this type of approach
Of course, today’s employment figure may not be the only trigger for this set up. Triangle traders would continue to keep an eye on this set up even if this morning’s number is a non event.