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Markets Volatile After Strong Jobs Report

It was another good month for the US labour market in March, but despite an initial pop in the dollar, the markets are not buying into it.

The US dollar initially reversed all losses to trade back in positive territory for the day but these gains could not be sustained. Since then the volatility has continued but the market can’t seem to determine what this means. The move was consistent with what we’ve seen on a number of occasions, the initial reaction is as you’d expect for a positive report but this is quickly undone as the markets continue to reject the possibility that this will lead to a faster pace of tightening. The fact that the Fed effectively blinked first at the last meeting and brought its own forecasts more in line with the markets more bleak assessment has probably only encouraged this kind of action.

The report itself actually contained a lot of positives, a slightly better payrolls number than we were expecting, a very marginal negative revision to past payroll numbers and wage growth that exceeded market expectations, up 0.3% on the month. The only negative in the report – a rise in unemployment to 5% from 4.9% – was actually a positive in disguise in that it appears to have been driven by a rise in the participation rate to 63%, its highest level in two years.

All things considered, this is a solid report that should encourage the Fed to continue tightening but unfortunately, the market simply refuses to buy into it.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam [4]

Senior Market Analyst, UK & EMEA at OANDA [5]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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