The June employment report was recently released, and the information has helped to relieve the fears that many investors have been experiencing. 287,000 new jobs were added to the U.S. economy last month, which shows remarkable signs of improvement over what was experienced in May. Many investors also showed signs of caution after England voted to leave the European Union. These things coupled together provided for several days of price drops across the world and across different asset markets. It was a good time to be able to sell stocks short or to trade binary options of the put variety, but long term investors were uncertain of how to proceed forward.
The perceived slowdown that was indicated by the May report led to the U.S. Federal Reserve keeping interest rates steady as the decision making team was reluctant to increase rates when there were signs of shakiness within the economy. While one month of positive data doesn’t necessarily mean that everything is perfect in the U.S. economy, it is a step in the right direction. Add to this fact that hourly wages rose again, for the fourth straight month. This is all positive data, and it is likely to be used by both parties in the upcoming National Conventions as the Republicans and the Democrats get set to officially nominate their Presidential candidates. Both will use the improvement to their benefit, but in reality this isn’t important for short term traders to pay attention to right now. Economic data and the emerging are far more beneficial to those in the short term marketplaces.
The unemployment rate did go up, from 4.7 percent to 4.9 percent. However, the rate of growth is changing in the U.S., and if job creation continues to occur at this rate, the unemployment rate will improve. These are two slightly different metrics. One measures where the employment market is at a given point (employment rate), the other measures the rate of change (new jobs). Neither is perfect in what they measure, but together they are very helpful. Even together though, they are incomplete. There’s no hard data revealed exactly on just how many jobs were eliminated or vacated, although this particular round of data does imply that more jobs were lost than gained. This is not encouraging news, but again, it is only one month of data and it is hard to base an overall view of the economy on just one month.
The aftershocks of the so-called “Brexit” now appear to be over, at least within the United States. Traders are still split in a 50-50 mix of which direction the FTSE 100 will move short term, and this has had a negative impact on long term investors. Over the last week, London’s main stock exchange has fallen by about 30 points, or about 0.4 percent. That’s a fairly noncommittal number, but that’s not necessarily what investors are looking for. Binary options traders should be wary of this kind of sideways motion. There is potential for making a profit if you are trading within tight channels, but to succeed with this kind of method requires precise timing and an ability to accept high degrees of variance. In other words, it’s not something that everyone will find profits attempting. Also, there’s not much point for beginning traders to try this when there are so many valuable opportunities found elsewhere right now. This is especially true within the U.S. markets after the positive news from the labor reports. The major indices like the S&P 500 typically respond very well to this kind of data for several days, so many trading opportunities will likely appear thanks to this.