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U.S. Jobs Figures Suggest Slowdown

Thus far, it has been a mixed day on Wall Street featuring a lagging DJIA and positive S&P 500 and NASDAQ. Participation is moderate, with many traders choosing to engage commodities or currencies instead of stocks. This has been evident by a bullish break by WTI crude oil above $55.00 and GOLD continuing to show strength.

U.S. Jobs Reports Come In Negative

While Friday features the big U.S. Nonfarm Payrolls and Average Hourly Earnings releases, today brought several secondary numbers. Perhaps they will serve as a preview for tomorrow morning’s statistics.

Here is a look at today’s data:

Event                                                             Actual      Previous

Challenger Job Cuts (Jan.)                          52.988K     43.884K

Continuing Jobless Claims (Jan. 18)         1.782M      1.713M

Initial Jobless Claims (Jan. 25)                     253K          200K

To sum up, this collection of jobs numbers suggest that employment levels are falling off a bit. The growth in Challenger Job Cuts (Jan.) indicates rising corporate layoffs. Also, Continuing and Initial Jobless Claims illustrate that early 2019 is producing growth in unemployed persons. If these numbers are any indication, then the U.S. Unemployment Rate may be soon to revisit the benchmark 4.0% level.

February Gold Futures

One beneficiary of the perceived economic slowdown has been gold. Even though equities have put on a show throughout January, gold values have also been on the bull.

 February Gold Futures (GC), Daily Chart
February Gold Futures (GC), Daily Chart

Overview: For most of January, gold traded in a vicious consolidation pattern between 1300.0 and 1280.0. Since the fake-out bearish break and rotation from January 18-24, the reversal has been on.

One has to wonder, why the rally in gold? A big reason for the bullish break was institutional participation above 1300.0. Reports from the World Gold Council (WGC) stated that central banks bought 651.5 metric tons of bullion in 2018. This was the highest volume of purchases since 1967. Once it appeared that the market was likely to support trade above 1300.0, investors bought in betting that gold was poised to gain back the losses of 2018.

For the time being, it looks as though holding gold longs is the institutional play for the intermediate-term.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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