Mixed Jobs Report Turns Focus towards Trump Inauguration
James Chen, CMT January 6, 2017 5:41 PM
Despite December’s NFP shortfall, the overall jobs data skewed towards the positive side, especially since the headline disappointment was not dramatic. As a result, the Federal Reserve’s currently hawkish trajectory of expected rate hikes is not likely to be affected by Friday’s employment figures. The immediate market reaction was muted, as might be expected from a mixed report, but there was a modest initial boost for the dollar and equities, and corresponding pressure on gold prices.
With the heavily-anticipated US jobs data out of the way, markets will now turn full focus towards the next big question mark – President-Elect Donald Trump’s formal inauguration on January 20th. In the run-up to this event, markets have clearly been affected in major ways by heightened expectations over what a Trump Administration may bring. US equity markets have been enamored with Trump since his November election victory, buoyed to dizzying all-time highs by bold promises of US economic growth, boosted fiscal spending, lower corporate taxes, and financial de-regulation. At the same time, the dollar has also risen sharply and gold has plunged on higher interest rate expectations that have been driven partially by Trump’s promises.
As these market moves for the past two months since the November election have been fueled by little more than these promises and a healthy dose of optimistic anticipation, will the actual inauguration of this brand-new administration finally bring a reality check to the markets? Although it is not expected that the inauguration event itself will prompt major market moves, Trump’s foray into his new role is bound to be rife with both political and economic challenges. Differences between the promises made and what can/will be done by the new administration will likely be made apparent in the ensuing days, weeks and months after inauguration.
If the reality of this new administration fails to match the euphoria that has been generated since November, as could likely be the case, equity markets will be at risk of pulling back substantially from the current all-time highs. Likewise, the US dollar could begin to stumble significantly and gold could receive a further boost from its recent lows.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.