In January 2017, the number of unemployed persons in the United States stood at 7.6 million. The unemployment rate was unchanged at 4.8%. Among different demographics, the unemployment rate among adult men and adult woman was 4.4%, with unemployment among whites at 4.3%, Hispanics at 5.9%, and Blacks at 7.7%. Some 584,000 people were added to the civilian labor force in January, while the LFPR (Labor Force Participation Rate) rose slightly to 62.9%.
These figures have real implications in the microeconomy, and it reflects in the levels of consumer confidence we are seeing. On 31 January 2017, the consumer confidence Index dropped from 113.3 in December to 111.8. While still strongly positive, declines are not viewed in a favourable light. The short-term outlook among consumers declined somewhat in January, as President Trump took office. The outlook vis-à-vis business conditions decreased from 24.7% favourable in December to 23.1% in January. By the same token, there was an uptick in the number of consumers who believe conditions will worsen – from 8.9% to 10.7%.
Is Trading Sentiment on Wall Street at Odds with Consumer Sentiment?
Economic data such as unemployment and consumer confidence have real effects on the economy. Donald Trump’s meteoric rise to the Oval Office was met with jubilation on Wall Street. Equities markets have been rallying to record highs. We can see this in the performance of the Dow Jones Industrial Average which is up 27.10% over 1 year, the S&P 500 Index which is up 23.71% over 1 year, and the NASDAQ composite index which is up 30.83% over a 1 year. That the Dow is holding above the 20,500 level is phenomenal – such milestones are rare.
While the equities markets are rallying, traders are expecting the inevitable correction to take place. A correction appears to be in the offing because the rising prices on Wall Street are not necessarily backed up by fundamentals. Traders on leading platforms around the world are buying into the speculation that at least 3 rate hikes will be taking place in 2016. If the Fed decides to move on interest rates, we could soon see the DXY rising, and dollar-denominated assets like gold facing downward pressure. Recall that the greenback is the world’s reserve currency, and gold is priced in USD. Any upward pressure on the strength of the dollar will work against gold and related assets.
How to Profit off Market Trends?
The mood of the moment is clearly risk-on for equities. This means that traders are eschewing typical safe-haven commodities like gold in favour of listed stocks. That Wall Street has enjoyed multiple successive sessions of gains is astonishing, but one truism remains: What goes up must come down. The cyclical nature of trading guarantees that rising stock prices will invariably face bearish sessions over there trading cycle. Traders can capitalize on stock price movements by following market analysis – both technical and fundamental – of their chosen assets. The Fed is a major catalyst when it comes to USD strength or weakness.
Other data includes NFP data, unemployment data, inflation rates information, and fiscal policy. Stanley Fischer – the vice chair of the Fed – made it clear that a policy of gradual interest rate hikes would be taking place over coming years. He refused to take the bait that a rate hike would be announced in March. As a trader, it is imperative that you review the top trading platforms. For example, high low reviews offer insightful data on payouts, the trading interface, withdrawal processing and execution times for specific platforms. By choosing the right platform, you can profit off rising and falling markets, provided you call it correctly.