Australian Employment Lower - Brisk sell-off reverses as Risk Sentiment improves

This evening of Wednesday March 7th 2012 at 19:30 EST (Thursday March 8th at 00:30 GMT) the monthly Employment figures were released from Australia. This figure can affect the price of the Australian Dollar forex pairs quite alot, but sometimes the data is delayed arriving accross the various economic news delivery platforms due the method this number is released in Australia.

Anyhow there is still opportunities here as it is still quick and often the moves are quite big so even if you miss the first 20-30 pips you can still get a chuck. Sometimes the whole move occurs in the 1st minute and then just goes flat. A few hours after going side-wise it can then continue the move or retrace.

During Wednesday the markets started to find a risk-on bid after several days of Risk-off selling pressure, pretty much since Wednesday last week on February 29th. That was the end of the month, Beranke had made his congressional testimony and there was a lower ISM data print from the USA.

So despite the bad Australian GDP yesterday, and then today's bad Employment data, the Australian dollar after of course selling off quite a bit in the intial news reaction, turned around and rallied over night as the markets turned bad to a positive risk sentiment mode. Alot of it is due to a higher level of participation in the Greek PSI Bond Swap deal.

Here is the data:

Australia Unemployment Rate
Estimates -> Median: 5.0k Average: 3.5k Low: -20.0k High: +17.0k
Actual: -15.4k Prior: +46.3k Revised: +46.2k

Australia Employment Change
Estimates -> Median: +5.2% Average: +5.2% Low: +5.1% High: +5.4%
Actual: +5.2% Prior: +5.1% No Revision

Australia Full Time Employment Change
Actual: 0.0k Prior: +12.3k Revised: +15.3k

Australia Part Time Employment Change
Actual: -15.4k Prior: +34.0k Revised: +30.9k

Australia Participation Rates
Estimates -> Median: 65.3% Average: 65.3% Low: 65.2% High: 65.5%
Actual: 65.2% Prior: 65.3% No Revision

This is the 30 second chart of the AUDUSD

This is the 30 second chart of the AUDJPY

Here is the 30 second chart of the EURAUD

This is the 30 second chart of the AUDNZD, this one is interesting because this one held the lows much longer than the other pairs, and actually continued to drop into the next day. This is important to be aware of in the context of the broader risk on/off sentiment driving the markets, coupling the right currencies against each others can offset that dynamic parameter.

Certainly if you are using the news to trade a bit longer term, this is necessary. First to be aware of the overall types of headlines driving the market moves and then to choose the right pair. Here is the same AUDNZD pair on the 5 minute time frame thru the next several hours after the release.

Here is the 5 minute chart of the AUDUSD for comparison.

Australia GDP - much lower than expected sharp Australian Dollar sell off

Last night at 17:30 EST on March 6th 2012 (00:30 GMT on March 7th) and technically the morning on March 7th in Australia where the data was released, the quarterly GDP figures were release for Australia. This data only comes out once a quarter and thus it is usually a good news event to trade because there is a big likelyhood for a surprise, unlike the GDP from the UK where prelimin, advance and final releases make things rather predictable.

This data came out much lower, and the Australian Dollar fell quite sharply. The pair is really the darling currency because it has one of the best yields of any of the developed economies. The fall was rather brief however and by the start of the European session the pair had mostly regained the loss.

Here is the data:


Australia GDP (QoQ)
Estimates -> Median: +0.8% Average: +0.8% Low: +0.4% High: +1.1%
Actual: +0.4% Prior: +1.0% Revised: +0.8%

Australia GDP (YoY)
Estimates -> Median: +2.4% Average: +2.4% Low: +2.1% High: +2.8%
Actual: +2.3% Prior: +2.5% Revised: +2.6%

Here are the 30 second charts of the AUDUSD, AUDJPY and EURAUD forex pairs which show the reaction in price after the deviation caused a surprise against what was expected from my analysts.

Australia RBA Cash Target - AUDUSD Drops on RBA statement of possible further easing

Last night Monday February 5th 2012 at 22:30 EST (03:30 GMT on Tuesday February 6th) the RBA made their decision on hold Interest Rates steady at 4.25%. This was expected by all analysts unlike last month where all but 3 of the 27 surveyed by Bloomberg expected a cut. The Australian Economy seems to be holding up well enough, despite a small slowdown in China, however the RBA is watching affairs unfold in Europe and is aware that this will affect the global economy and expressed their intention to lower rates if things get worse.

Here is a link to their Statements

So the market took this as a cue that the next move from the RBA could still be a cut and thus the Australian Dollar Forex pairs fell.

Here is a 1 minute chart of the AUDUSD forex pair:

and this is the 1 minute chart of the AUDJPY forex pair

Australian Employment - All good, nice spike, no follow thru in risk-off market

Last night at 00:30 GMT on February 16th 2012 (19:30 EST Feb 15th) the Employment figures were released out of Australia. Recently the Full time and Part time components have come with expectations. There have been times when the deviation on Net Employment Change has not come from Full-Time jobs which has actually gone the other way. This time all the figures lined up. There was a good strong spike, and then the start of a retracement style afterspike, however with all the risk aversion due to the further delays in coordinating the next Greek bailout, the Australian Dollar was unable to follow thru with a continued move higher.

Here is the data:

Australia Employment Change
Estimates- Median: +10.0k Average: +12.4k Range: -10.0k to +36.0k
Actual: +46.3k Prior: -29.3k Revised: -35.6k

Australia Unemployment Rate
Estimates- Median: +5.3% Average: +5.3% Range: +5.2% to +5.5%
Actual: +5.1% Prior: +5.2% No Revision

Australia Full Time Employment Change
Estimates- Median: 0.0k Average: 0.0k Range: -10.0k to +10.0k
Actual: +12.3k Prior: +24.5k Revised: +24.0k

Australia Part Time Employment Change
Estimates- Median: +7.5k Average: +5.8k Range: -20.0k to +20.0k
Actual: +34.0k Prior: -53.7k Revised: -59.6k

Australia Participation Rates
Estimates- Median: +1500k Average: +1062k Range: -1500k to +2700k
Actual: -171k Prior: +304k No Revision

Australia RBA Foreign Exchange Transactions
Actual: 383M Prior: 737M No Revision

First the 1 minute chart of the AUDUSD forex pair:

Also the 1 minute chart of the AUDJPY, another good pair to trade on Australian economic news:

Also the EURAUD 5 minute chart which show that even this pair did retrace thru the asian session.

One pair which was able to hold its gains, but not make any more significant highs was the AUDNZD, here is the 5 minute chart:

Australia RBA Cash Target - Unexpectedly Hold Rates lead to rally in AUDUSD

Last night February 6th at 21:30 EST (02:30 GMT on February 7th) the RBA released their Interest Rate decision. Out of the 27 analyst estimates only 3 expected the RBA to hold rates steady at 4.25%. The other 24 expected them to cut 25 basis points to 4.00%. They surprised the market by not cutting interest rates and instead holding rates steady at 4.25%. The AUDUSD forex pair rallied over 120 pips on the news. Other Australian Dollar pairs: AUDJPY, EURAUD has similar gains.

The past 2 meetings the RBA has cut rates by 25 basis points each meeting. The analysts were roughly split in estimating they would do these cuts each time with about half predicting a cut and the other half predicting the RBA to hold. This time nearly all the analysts jumped on the band wagon and predicted a cut. However these predictions were quite backward looking as since the last FOMC meeting on January 25th 2012 and the NFP on this past friday, market sentiment has in general been alot better. An article appeared from Sydney Morning Herald just before Sunday night's Retail Sales report about the likelihood of a RBA rate cut diminishing, however no analysts modified their expectations over the next day before the RBA announcement.

Here is the 1 minute chart of the AUDUSD:

Here the 5 minute charts of AUDUSD and EURAUD. EURAUD dropped on the news but during the European Session some positive developments on situation in Greece turned the pair aroung. The AUDJPY got a further lift when the Japanese Yen started to weaken through out the day:

Australian GDP - positive deviation leads to pop higher and then trend

Australian GDP is released only quarterly and has a good reaction to price. There are some issues with Australian data in terms of the way it is released. Apparently only the Interest Rates are released electronically while the other data is at first transmitted by phone so various news services pick it up at slightly different times.

Tonight's q/q data came out at +1.0% above the +0.8% expect and thus a +0.2 deviation above the median expectation. The previous quarter's release was also revised up from +1.2% to +1.4% so again a positive deviation. This is all for the quarterly figures.

There was also y/y numbers which were also higher coming out at +2.5% above the +1.9% median expectation for a +0.6 deviation higher. Also the previous month was revised from +1.4% to +1.9 for a +0.5 deviation.

First the 1 minute chart shows how the initial reaction all came in the 1st minute, then things went sidewise for over 90 minutes.

then after a pullback to the 61% fibonacci level of the initial news release reaction spike, price again turned to the upside to rally further. Here is the 5 minute. The price action was very similar to the September release, only with the exception that this time there was more of a pullback over 3 hours after the release before things further rallied, but again profit taking did occur an hour or so after the London open, just like September.

Australian RBA Interest Rate Decision

The 25 analysts polled on Bloomberg roughly half expected the Royal Bank of Australia - the RBA to cut rates 25 basis points to 4.25%, while the remaining half expected the RBA to hold rates steady at 4.5%

This setup a situation where there was a guarenteed move, since the 50% expectation of a cut had been priced into the market, so if they held rates steady some of that priced in cut would unwind and the Australian Dollar would rally.

Anyway they did go ahead and cut, and the Aussie Dollar sold off. This makes 2 cuts of 25 basis points in a row. The RBA is mostly doing this in response to the slowdown of the global economy as a whole, which is mostly being created by the Eurozone Debt Crisis which impacts business all around the globe.

RBA Unexpected Raises Interest Rates to 4.75%

At 3:30 am UK time and 11:30 EST the RBA (Royal Bank of Australia) hiked rates again. This was largely unexpected with 17 out of the 23 economists predicting the RBA to hold and only 6 expecting them to hike, but hike they did to 4.75% interest rate, and an instant 100 pip move occurred in the 1st minute after the release. Many traders in the ProfitMongers room earned a great amount of pips trading the spike using the Secret News Weapon trading forex futures and spot fx. There was also an afterspike opportunity which created about +15 pips, but after such a move, especially during the asian session, price action just consolidated.

A few hours later european traders started waking up to see the news, a nice trade setup occurred about 15 minutes before the London open. We took advantage of this trading opportunity in the live trade room, going long the AUDUSD at 0.9983 and taking profit above parity at around 1.0010. Did hold some in case of a further move but as other bad news hit the pound it caused the USD to appreciate versus the rest of the pairs, so the rest was out at breakeven.

Australian Retail Sales

I have not been so impressed with this news indicator, however the past 2 months have seen it turn around. Possibly now that there is less fear in the markets, traders are again looking at the data. Back in August a -1.4 deviation from the expected number (0.5 exp -1.4 actual) caused a quick blip down and retraced well past the pre-release price: Click here for chart

However then in September a -1.5 deviation gave a nice spike, small retrace and a continued move down, very nice trading. View Chart

Then last month a tiny +0.4 deviation gave a nice spike, then went flat, but again then continued. Of course we cannot forget the prevaling trend and sentiment in the AUD during that period. See chart


So I decide to follow with a 0.4 deviation from the expected number of 0.5, so 0.9 or great I would buy, and 0.1 of less I would sell. This month we also had the quarterly numbers which should not conflict with the month on month number. There was a conflict , the m/m was -0.7 and the q/q was +0.1, however the q/q numbers were slightly delayed, so the market had a good reaction down on the m/m number. But it was a fast initial spike down and I could not get out at the bottom before it started to bounce, so I missed about 15 more pips, but still I got 40 pips so I was happpy

RBA Raises 0.25% but some expected more

Here is a trade from last night Nov.3rd 2009, Austrailian Central Bank was expected to raise rates by 0.25%, however 20% of analysts expected a 0.5% rise. This meant if they only raised 0.25% as most expected we could get a short trade because some expected them to raise rates more. If they did raise to 0.5% this would have been an excellent long trade, and if they held study this would be even a better short trade.

As you see in the image, there was some volatility before the release, looks like some rumor was leaked that the AUD central bank would not raise so much, anyhow the price came back up just as before the news release. They only raise 0.25% and I go short on AUDJPY, I was saving AUDUSD for a bigger trade if they held at no change, or raised 0.5% for a bigger move. Quickly AUDJPY moves about 18 pips in my favor, and I cash out, mostly because of the strange prenews volatility (did someone know something I did not) anyhow I was out a bit too early as AUDJPY hung in this price zone for about 1 minute, but then fell another 25-30 pips, again I take the safe pips. I will work on exiting half and leaving a bit for a continued move, however having traded these for awhile, I know sometimes they can reverse pretty fast.