In April 2017, the US economy added 211,000 new jobs, bringing the overall unemployment rate down to just 4.4%. Despite a rather lacklustre start to 2017, the US economy has shown its resilience with unemployment reaching a 10-year low. Consumer confidence and business confidence are up, and US bourses are rallying on the back of this good news. Q1 2017 growth was rather anaemic for the country, but negative sentiment appears to have faded as employers boosted April jobs numbers by a long margin. Additionally, the March unemployment rate of 4.5% was bested by an April unemployment rate of just 4.4%. A big part of the reason we are seeing dropping unemployment rates is more full-time employees being hired by companies. This indicates that markets are being cleared with demand/supply and that hiring is taking place in earnest. The average pace of new hires per month in 2017 is up at 185,000, roughly the same as President Obama’s final year in office.
Strong US Economy Bodes Well for Options Traders
The impact of the April jobs figures will likely boost the chances of the Fed raising rates sooner than later. Analysts are now confident that the Fed will implement an additional 25-basis point rate hike in June. According to the CME Group FedWatch tool, there is now a 78.5% likelihood of interest rates rising by 25-basis points on June 14, 2017. If the June rate hike doesn’t come to fruition, it will likely take place in July, with a 74.2% probability of a 25-basis point rate hike in the region of 1.00% – 1.25%. All of this provides binary options currency traders with plenty of cannon fodder. With increasing interest rates around the corner, demand for USD is going to increase. Provided strong economic growth for the April-June quarter continues in 2017, it is all but assured that the Fed will hike interest rates within a month. This gives traders plenty of direction vis-à -vis going long on the greenback, the Dow Jones, the Nasdaq, and the S&P 500 index.
