Explore Special Offers & White Papers from AFS

Dollar Recovers After US Employment Data

STOCK INDEX FUTURES

Nonfarm payrolls in January increased 467,000 when up 150,000 were expected.

The unemployment rate increased to 4.0% when 3.9% was anticipated.

Stock index futures declined in response to the increase in the headline increase in nonfarm payrolls on the belief that the nonfarm payrolls number underscored the need for the Federal Open Market Committee to increase its fed funds rate.

CURRENCY FUTURES

The U.S. dollar index firmed when the U.S. employment report was released.

In the overnight trade the euro currency strengthened to its highest level since November last year, after comments from European Central Bank policymakers signaled a hawkish stance. During yesterday’s ECB press conference, President Lagarde ruled out keeping interest rates stable this year. Money markets now are predicting the ECB will raise rates by 40 basis points this year instead of a 30 basis point increase before the February 3 monetary policy decision.

Retail sales in the euro area fell 3.0% month-to-month in December, which is the largest decline in eight months and much worse than market forecasts of a 0.5% decline.

Interest rate differential expectations suggest the long term trend for the British pound is higher and lower for the Japanese yen.

INTEREST RATE MARKET FUTURES   

Futures declined when the on balance stronger than predicted U.S. employment report was released. Many market participants expect the Federal Open Market Committee will increase its fed funds rate five times this year with the first increase likely at the March 16 meeting.

Although today’s employment data suggest a strong U.S. economy, some analysts believe that if the rate of growth in the U.S. economy slows, and also globally, it may be difficult for the Federal Reserve and other major central banks to maintain ramped-up hawkish policies.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore Special Offers & White Papers from Archer Financial Services

Get Started

Contact Us Today