July's US employment report, which is scheduled for today, August 1st, may show a further increase in the amount of new jobs created in the US during the reporting period, thereby indicating lower unemployment in the USA, the world's biggest economy. Actually, if this is the case, this is going to be the lowest unemployment level since 2008.
Such news is going ot be positive for the US economy if the scenario manifests itself. Meanwhile, traders and investors are nervous and go risk averse, thereby reducing exposure. This may well trigger a correction in financial markets.
As for the EURUSD, the common European currency is currently trading close to 1,3390, Market Leader reports.
Strong Employment Report May Trigger Volatility Hikes In Financial Markets
At this point, financial markets have already started reacting negatively to the economic news coming for the USA. The US stock market went sharply down on Thursday on the idea that an economic improvement coupled with an accelerated pace of inflation may well back an earlier-than-expected interest rate hike by the Fed. The concerns are fueled by yesterday’s strong economic figures from the USA.
Some investors pointed at weak quarterly reports published by some American companies yesterday. All in all, the quarterly reporting season has been largely positive so far. However, some negative reports are still pressing the US stock market.
At the same time, other investors are concerned about some Treasury bonds defaulting in Argentine, which is coupled with another wave of concerns about the Eurozone's economic health. Most likely, the ECB will have to introduce some extra stimuli.
Meanwhile, investors are taking profits in advance of today's reports, including the US employment report. The market volatility has boosted by 20%. Yesterday, the VIX indicator opened at 14,35 and closed around 16,95.
As for the Dow Jones Industrial Average, it went down by 1,88% during yesterday's trading session, thereby closing at 16 563,3. Nasdaq and S&P500 went 2% down, thereby closing at 4 369,77 and 1 930,67 respectively, on above-average trading volume.
Most likely, the sellout in the European stock market that was underway for a couple of days affected the US stock market to some extent as well after some problems with a Portuguese bank - Banco Espirito Santo.
Today, on August 1st, experts are looking forward to seeing 233 000 new jobs in the non-farm sector of the American economy. At the same time, the rate of unemployment is expected to go down to 6,0% from the current level of 6,1%.
If higher income is backed by a higher amount of new jobs above 200 000 in July, market participants are likely to shift their expectations concerning the Fed's interest rate hikes to a much earlier date. At this point, they anticipate the first round of interest rate hikes in mid 2015.
How Do Masterforex-V Academy Experts Trade News Profitably?
According to the comprehensive analysis made by Masterforex-V Academy and based on the H1 chart of EURUSD, the mid term situation in the market loos as follows:
The long-term bias is still bearish. It matches the mid-term trend. The consolidation of the US Dollar continues within the scope of the 1,3364-1,3403 range. A break out of he range is probably going to show us the direction of the next big move out there.
In particular, a break above 1,3403 fill favor a further rally of EUR against USD, maybe up to 1,3443 and even 1,3484, especially of the US report disappoints the market.
Alternatively, a break below 1,3364, especially if backed by strong figures, may trigger a downswing to 1,3318 and 1,3300.
As far as binary options trading is concerned, the Binary Options Department of Masterforex-V Academy recommends going short and purchasing put options on EURUSD along the existing downtrend. Put options should be purchased after bullish reactions. The recommended expiry time is around 2 hours.
