Trade Example: Trading The Aussie Jobs Report

On the 20th of February we had the release of the Australian Jobs Report. Even though the headline number was better than expected, the Unemployment Rate, which was the main focus, climbed more than expected to 5.3% from a prior of 5.1%, thus moving in the wrong direction from the RBA’s goals.
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We’re going to demonstrate how Forex Source subscribers made money trading a sentiment shift involving the Australian Jobs Report this week…

The move we’re going to be looking at is this one here on AUDUSD. So, let’s break this down and see how you could have predicted and caught this move, using our market commentary.

So, firstly we need to understand the context or the baseline surrounding this pair before the move took place…

Now inside the Forex Source Terminal on the 19th of January, we released our Dominant Currency Sentiment report as well as our current sentiment driver report.

And in these reports we saw that the AUD was seeing some upside due to an overall positive risk tone seen throughout markets due to an improving outlook for the Coronavirus.

We also saw that the strength was only temporary as the market was still expecting the RBA to require further interest rate cuts somewhere in 2020 due to the domestic economy’s outlook as well as the external threats facing growth prospects.

Once the baseline was in place the next step is to identify the type of breaking news that would generate the biggest market moving shift…

So, for this we can go back to the terminal again to the 19thto the current sentiment drivers report for the AUD which clearly highlighted the next big event to watch for the AUD was the upcoming jobs report the following day.

The reason why this was so important was because employment data was a key factor for monetary policy as the RBA believed that the Unemployment Rate would need to fall to around 4.5% to reach the central bank’s inflation and consumption goals.

Thus, the Unemployment Rate was in Focus.

So now all we needed next was the trigger, in other words, the sentiment shift that we identified ahead of time, to actually take place.

So, also in the terminal, later on the 20thof February we had the release of the Australian Jobs Report. Even though the headline number was better than expected, the Unemployment Rate, which was the main focus, climbed more than expected to 5.3% from a prior of 5.1%, thus moving in the wrong direction from the RBA’s goals.

Now at the same time, the market’s risk tone had also soured due to further fears of the Coronavirus which caused further weakness in the AUD. So we had two reasons to short the Aussie Dollar after the release of the Jobs Report.

Looking at the chart, we can see that we had an initial move to the downside which you could have used to jump in, however after the event we had a pullback and the pair didn’t really go anywhere for about an hour before starting to run lower, which means you would have had plenty of time to evaluate this as a tradable opportunity and jump in on the chart.

If you missed the first phase one move you could have waited for a pullback to a key level like the 0.6650 psychological level to re-engage the pair to the downside as the Unemployment Rate and risk-off tone meant the expectations was for the AUD to remain pressured throughout the session.

So, if you’re interested in learning more about how our market commentary can help you interpret news and fundamental analysis into profitable trades like this, click the menu above and check out Forex Source.

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