Australian Employment Preview: Could it save the aussie?

• Australia is expected to have added 25K new jobs in June, below the previous 60.6K.
• Overheating inflation is still the main theme and the catalyst for risk-off movements.
• AUD/USD is under pressure and has major chances of a bearish breakout.

Australia will report June employment data on Thursday, July 14. The country is expected to have added a modest 25K new jobs after gaining 60.6K in the previous month, while the Unemployment Rate is foreseen down to 3.8% from 3.9% in May. Ahead of the figures, Australia will also unveil July Consumer Inflation Expectations, with analysts expecting it at 5.9%, down from 6.7% previously.

Employment and inflation

As usual, the report will not include wage growth, which is released quarterly in the country around five weeks after the quarter ends. The latest Wage Price Index was the Q1 2022, which rose by 0.7% QoQ and 2.4% YoY, the highest annual rate recorded since December 2018, although still below the comfort RBA’s level at around 3%.

Job creation and wage growth have been overshadowed by lingering inflation, not only in Australia. Generally speaking, central bankers’ function is to keep inflation in check at levels between 2% and 3%. So far, policymakers have failed miserably as the Consumer Price Index continues to rise in most global economies. US figures released on Wednesday were quite discouraging, as the CPI soared by 9.1% YoY, higher than anticipated.

That means the Federal Reserve could become more aggressive and, therefore, drag other major central banks into tightening their policies. In this scenario, employment figures have lost the power to move the market unless the outcome diverges big from expectations.

AUD/USD possible scenarios

The AUD/USD pair trades near a 2-year low of 0.6710, as markets are in risk-off mode. A reading below expected will likely lead to a bearish breakout if it does not occur earlier. The pair is technically bearish, which adds to a potential downward extension scenario. Below the 0.6700 threshold, the pair will meet support at 0.6660 and 0.6620.

A better-than-anticipated report could push the aussie higher, but sellers will likely return after the dust settles. The immediate resistance level is 0.6802, Wednesday’s daily high, followed by the 0.6870 price zone.