Janet Yellen, Vice Chair of the Federal Reserve is keen to stress that “unemployment remains too high”. Her stance indicates alignment with previous outgoing Chairman Ben Bernanke’s notably low interest rates. Financial market interest is further compounded by clear sensitivity from the Federal Reserve towards unemployment. Increased emphasis on monetary initiatives to sustain/improve employment emphasises the impact of these stats across the global economy.
The US employment situation is far from dire. The Department of Labor recently reported that the economy actually exceeded the expected number of new jobs created in November, adding 203,000 new positions instead of the expected 185,000. Add to this a dropping unemployment rate from 7.3% to 7%. Traders are circulating around these figures; a 0.5% drop in unemployment rates increases the likelihood of Federal Reserve intervention and tapering of the QE policy.
The latest employment data had a relatively positive effect on the US dollar. The dollar gained gained ground against other currencies, namely the CAD. The data tricked further into the EUR/USD pair, with the Euro hitting a new high following the news. The US dollar rise broke away from a five-day slide for the S&P 500 index. Jim Russell, equity strategist from U.S. Bank Wealth management noted “the market is getting increasingly comfortable with a taper scenario that parallels an incrementally stronger economy”.
With the Federal monetary policy decision coming ever-closer, all data is subject to thorough market dissection as analysts seek out clues or insight into the US economy. As expectations build so too does market volatility.
This information has been prepared by IG Markets Limited. ABN 84 099 019 851, AFSL 220440. We provide an execution-only service. The material on this page does not contain (and should not be construed as containing) personal financial or investment advice or other recommendations, or an offer of, or solicitation for, a transaction in any financial instrument, or a record of our trading prices. No representation or warranty is given as to the accuracy or completeness of the information. Consequently any person acting on it does so entirely at his or her own risk. The information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who views it. IG accepts no responsibility for any use that may be made of the comments and for any consequences that result.
Latest posts by Sean Bryant (see all)
- Wealthfront Review: Get Started Investing For Free - January 9, 2017
- After Holiday Online Sale Shoppers Beware: Fake Apps and Scams Are Out There - January 4, 2017
- 3 New Financial Resolutions for the New Year - January 2, 2017