empty
 
 
06.02.2023 10:32 AM
Markets halt rally due to strong US labor market data

Global markets were shocked once again as Friday's employment data in the US came markedly better than expected. The report said there is an increase of about 517,000 new jobs in January, while the December data was revised to 260,000. This strengthened the fears that the Fed will continue its aggressive rate hike cycle as consumers may resort to spending more, which might cause not only the slowdown of inflation, but also its rise again. If that happens, the Fed will have no choice but to continue to raise rates, perhaps more strongly, pushing it to above 5%.

Unsurprisingly, dollar demand grew because of the news, while equities fell almost unanimously. The fall was recovered afterwards, but it already halted the rally and threatened the bull market.

Investors are now in a very tricky situation because on one hand, the Fed has acknowledged a decrease in inflation after more than 6 months, but on the other hand, the strong labor market data could stimulate inflation.

Most likely, the rally on the stock markets will pause, while dollar will continue to grow at least until the next release of US inflation data. If that shows that there is a halt or even a slight increase in inflation, the rally in stock indices will resume, while dollar will fall. As for the market situation before the release of the data, volatility will be high as uncertainty will prevail. That could also be a catalyst for consolidation in the world markets.

Forecasts for today:

This image is no longer relevant

This image is no longer relevant

EUR/USD

The pair is trading above 1.0775. If this level holds, a rise to 1.0875 is possible.

USD/CAD

A renewed rise in crude oil prices may prevent the pair to rise further. If the quote stays below 1.3425, the pair will continue heading towards 1.3300.

Pati Gani,
Analytical expert of InstaForex
© 2007-2024
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST
  • Chancy Deposit
    Deposit your account with $3,000 and get $8000 more!
    In March we raffle $8000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
    JOIN CONTEST
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
    GET BONUS
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
    GET BONUS
  • 30% Bonus
    Receive a 30% bonus every time you top up your account
    GET BONUS

Recommended Stories

Can't speak right now?
Ask your question in the chat.
Widget callback