Market Reaction to US Job Numbers

by Sean Bryant on December 13, 2013

Markets around the world are often influenced by key economic events. These events include employment figures. Employment data can be correlated with economic performance, feeding into key economic factors such as production and consumption. This in turn impacts market activity across a range of product sets. From gold trading right through to FX pair value and share pricing patterns within a specific country.

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.

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Sean Bryant

Sean Bryant created in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.

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  • I trade Forex and used to be hung on those economic calendars to see market reactions but now try to trade long term to avoid so much stress! No wonder traders work so much, you don’t want to miss any of it.

    • Agreed. I used to do more short term trading because of the potential upside. I feel that I can do just as well but looking at long term factors.

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