The week will kick off further discounting the barn-burner July Nonfarm Payroll Report, which reeled in a healthy 255,000 new jobs.
The economy has now added jobs for seventy consecutive months, the longest such streak in history.
I always use my two-day rule when it comes to this game changing data release. That’s how long it takes markets to fully discount it’s impact.
I managed to nail the number position wise, betting on a pop in the US dollar with a short in the Japanese yen, which duly took place.
A healthy US economy will drive the Federal Reserve to raise interest rates sooner, making it more attractive as a store of value.
This is especially true against the negative interest rate currencies of the Euro (FXE), the Yen (FXY), and soon to be, the British Pound (FXB).
At least that’s how it will be perceived by traders for the first few days.
I also made a timely exit from my short position in the S&P 500 (SPY) earlier in the week, clocking a 9.43% profit in only two trading days. Stocks rocketed to new all time highs on the news.
It’s been a very good week.
It is hard to argue with the strength of the payroll report. The headline unemployment rate stayed at a full employment 4.9%, rendering last week’s grim GDP report utterly meaningless.
The May payroll report was revised up by 13,000, while June added 5,000 new jobs.
The big gains were seen in professional and business services (+70,000), health care (+43,000), and leisure and hospitality (+45,000).
A new feature of the jobs picture this year is that the government has finally started adding jobs, largely through the hiring of teachers to accommodate local population growth.
Once again, mining was the big loser (-6,000) because it includes the beleaguered oil industry.
After the fireworks of last week, the coming five days will be a yawn on the data front.
Don’t forget that we also have the Rio Olympics all week, which, combined with the summer vacation schedule, tends to suck volatility out of markets.
