The U.S. Department of Labor’s Bureau of Labor Statistics released April’s Employment Report. On Wednesday we received the ADP report which showed a slowdown in private sector hiring and we cautioned forex traders about the release of today’s data (Protection against Friday’s Employment Disappointment). Economists surveyed expected the U.S. economy added 148,000 jobs; we called for job growth to clock in at 89,000 jobs.
Today, the BLS surprised all market participants with a 165,000 figure and additionally reported that revisions to both February and March added 114,000 jobs more than previously reported while the unemployment report dropped to a four-month low of 7.5%. Equity markets have rallied with the Dow Jones breaking through the 15,000 level for the first time in its history and the S&P 500 clearing the 1,600 level.
While we admit that we were taken by surprise, especially by the upward revisions for February and March, this report has created great entry points in order to take on short positions in in the Dow Jones as well as S&P 500 as we expect a heavy slowdown into the summer and the ‘Sell in May and Go Away’ mentality will set in around current highs. The party is over for all of those who sat on the sidelines, and those invested will have to lock in profits.
Before equity traders and perma-bulls declare victory, let’s take a look at a few key facts:
This has been the most sluggish ‘recover’ since World War II and has also been referred to as the jobless recovery
Workers on non-farm payrolls remain 2.6 Million short of the labor market peak reached in January of 2008
12 Million Americans remain unemployed, and those are only the ones counted by the government
Several Million Americans gave up looking for a job and remain unemployed
Several Million Americans more are under-employed and can’t support themselves or their families
The current pace of employment growth would translate to the U.S. reaching full employment by 2021 at the earliest
When it comes to forex markets, we advise clients to trade currency pairs where the USD acts as a quote currency with a bearish bias with the exception of the AUDUSD pair, and to approach currency pairs where the USD acts as a base currency with a bullish bias. This is a very general recommendation and each currency pair needs to be analyzed separately. We welcome you to follow our PaxForex Trading Recommendations for exact entry levels to trade, together with two exit strategies and take profit levels.
