Good morning traders,
The close of last week saw the biggest Jobs announcement of the month. A very important news event in the economic calendar. Let’s have a look and see what that survey brought about and what it could mean for our trading week ahead.
This was probably the most perfect jobs report across the board, there is no other way to describe it. Should these increases be continued moving forward then in June the Federal Reserve is absolutely going to increase the interest rate, this may even be the favored position if inflation shows signs of moving higher too.
Friday’s NFP (Nonfarm Payroll Report) was highly anticipated. Over the past 11 months the job growth has been constantly strong with over 200 000 jobs created. With the exception of December there was a 0.2% drop in average hourly earnings, this had traders wondering about the Federal Reserve’s decision whether to increase interest rates or not.
So it turned out that the report was even higher and came out stronger than most positive analysis could have predicted. The job expectation outcome was forecast at 230 000 actual, but the final figure was even higher than expected at 257 000. Also measured in these monthly NFP reports are the average hourly earnings that are always widely watched. This segment of the report also spiked by 0.5% mid-month in January being the strongest yet. The previous time such a spike had been seen was in November 2008. On the other hand, previous NFP reports also received higher than expected actuals, by a total of 147 000+, which brought Decembers NFP to 329 000 and then Novembers report to a startling 423 000+.
Post-recession, the average work hours reached a high of 36.4 hours and even the labor force participation rate reached 62.9%. This upsurge in the labor force participation rate, shows a mere movement in the upward direction in the unemployment rate.
With all these positive news what does this mean for the markets? The greenback (USD) is reigning high and seems to not be showing any signs of decline any time soon. EUR/USD dropped while the USD/JPY saw an increase. The US equities are on track to open on a higher note today while bonds yields are also doing well in spite of the Federal Reserve’s rate hike.
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