Australian Employment Data Wrong? What Matters to Traders

December 11, 2015

Australian Employment Data Wrong? What Matters to Traders:
Yesterday’s Employment figures out of Australia were what can only be described as marvellous! …if taken on face value that is. As Peter Martin of the SMH hilariously pointed out, our stubborn Minister for Employment had no problems doing.

“The minister was asked whether she had concerns about the reliability of the figures. She said she did not.”

With the Employment Change printing a whopping +71.4K v the -10.0K expected, on the back of the +58.6K in November, I think it is fair to at least ask the question whether the figures are entirely correct. Add the Unemployment rate falling to 5.8% v an expected rise to 6.0% and you have one amazing set of numbers which surely are too good to be true.

So why the issue you ask? 1/8th of the 26,000 households surveyed each month by the Bureau of Statistics must be rotated from time to time. It is the fact that the newly surveyed households are sometimes very different to the old ones surveyed which is being blamed for the occasional jumpy nature of Australian unemployment data.

But what does that mean for us as traders? To be honest, it really doesn’t matter whether the figures, or the way they’re gathered, are right or wrong for us. The only thing that matters is price, and the perception of where price should actually be.

AUD/USD Daily:
151211_audusd_daily
Click on chart to see a larger view.

The market has interpreted the figures as beating expectation, but not by the record amounts being reported and that’s all that matters. It’s a quality narrative and hugely beneficial for your overall view on the Australian Dollar, but if you’re trading just remember to always take that step back and remember what really matters in the trading game. Price.

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On the Calendar Friday:
USD Core Retail Sales m/m
USD PPI m/m
USD Retail Sales m/m
USD Prelim UoM Consumer Sentiment
CNY Industrial Production y/y

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Chart of the Day:
With last night’s other major piece of news being the interest rate decision out of Switzerland, the SNB left rates on hold and maintained the now hollow pledge of intervening when needed to possibly weaken a currency they still see as overvalued. Today’s chart of the day takes a deeper look at the Swissy.

USD/CHF Daily:
151211_usdchf_daily
Click on chart to see a larger view.

The daily shows a juicy fake-out above resistance, before the USD squeeze and Draghi’s relative inaction sent price on a one way ticket toward major trend line support.

USD/CHF 4 Hourly:
151211_usdchf_4hourly
Click on chart to see a larger view.

But it’s the 4 hour chart that I wanted to highlight, starting with the beautiful bounce off the 0.9817 level and look at why it stopped there. First of all we have seen the level tested both on the support and resistance sides, with the major reactions marked on the chart above.

But look at the candle above the arrow. Price didn’t just bounce off the level, price BOOSTED off the level. One of the most important aspects of determining the strength of support/resistance levels is in how hard price has moved off the level in the past. As you can see, buyers previously dominated this level and when price came back to re-test, combined with confluence, this was just too much not to bounce.

Do you see opportunity trading USD/CHF? Is there more than 50 pips in this bounce?

Dane Williams – @VantageFX

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