Friday was a big day for the global market, and for good reason. Early Friday morning, the US jobs report was released, surprising investors in a big way. However, I believe that Friday was just the tip of the iceberg. Today, we'll talk about what we saw from the US jobs report, why this report was so important, and the opportunities that it will likely create in the week ahead. So, let's get right to it…
US Jobs Report Misses The Mark
As mentioned above, Friday was a big day in the market as the US jobs report was released. The shocking results showed that there was slowing in jobs growth in the country during the month of August. According to the report, the United States economy only added 151,000 jobs during the month. While that may seem like a relatively big number, the truth is that this number was shockingly low.
At the end of the day, an economy that's doing well will generally see strong jobs growth. In the United States, strong economic conditions are signaled by jobs growth in the amount of 200,000 per month consistently. However, economists expected that jobs growth in the month would miss this mark. What they didn't expect was that growth would come in so low. Overall, economists expected that the economy would see growth in the amount of 170,000 jobs. Nonetheless, the report showed that growth even missed this mark.
Why This Was So Important For The Global Market
While it may seem like US jobs is a very localized report, this report can lead to global reactions, and in this case, that's exactly what we've seen and what I'm expecting to see moving forward. The reason for this is relatively simple. First and foremost, the US economy is the strongest in the world. So any news with regard to the US economy will generally have an affect around the world as trading partners are exposed to the data. On top of that, globally, commodities are priced using the USD. So economic news out of the US that has the potential to move the value of the USD, will generally move the commodities market and any commodity-centric stocks.
However, this time around, the news was more important than before. That's because investors widely expected that in the month of September, the Federal Reserve would raise its interest rate. However, after the poor jobs data, the argument for a rate hike is becoming weaker. Considering that an increase in interest would lead to gains in the USD as well as less loans and spending in the United States, this story has a profound affect globally.
What Opportunities The Report Opens For Binary Options Traders
As binary options traders, our job is to take advantage of trends in the market. The weak US jobs report is likely to cause several trends…
Commodities – On Friday, commodities saw big gains as the idea of a low interest rate sticking around for a while longer led to bullish activity. Also, weak economic data led to stronger safe haven demand surrounding gold and silver. Moving into next week, I'm expecting for this movement to continue.
Currencies – As a result of the poor economic data, the USD started to see declines. However, once again, I'm expecting that this is the tip of the iceberg. Look for more declines and strong put option opportunities.
Stocks and Indices – When it comes to stocks and indices, we're likely to see more upward movement ahead as well. The poor report leading to expectations for further rate hike delays means that we'll see more support for both economic and market growth.
What Do You Think?
How do you think the US jobs report will affect the market in the week ahead? Join the discussion in the comments below!
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