Dow Closes Lower On Mixed Jobs Report

On Friday, the Dow Jones closed lower after the U.S. reported a mixed jobs report. Comments made by the Fed boosted the dollar higher, applying pressure on the Dow. The air strike on Syria may have rattled the market as well. The Dow Jones closed lower by 0.03% to 20,656.10.

Mixed Jobs Report

The U.S. labor department released a jobs report that was mixed. It reported that there were 98,000 jobsadded in the month of March. There are two problems with respect to this data.

The first being that the data came in below expectations. It was expected that the U.S would add at least 185,000 jobs.

The second problem was that it was the slowest hiring done in over a year. A slowdown in hiring occurred for a few reasons. They include the expectation that construction hiring in March was going to see a slowdown. In addition, severe weather patterns in March was also going to be a deterrent to jobs being added.

Despite all the negatives in the jobs report, there was one positive item. That positive was the fact that unemployment rate fell from 4.7% in February to 4.5% in March. That was the largest drop in over 10 years. A drop in the unemployment rate still shows that hiring remains relatively strong.

Fed Comment

What also was a factor in the Dow trading lower was a comment made by one Fed official. Fed official William Dudley stated that there would only be a small pause in the rate hike schedule. This, despite the fact that the Fed has made it clear that it wants to start scaling back on its bond buying program.

The Fed stated last week that it wants to scale back the buying of its $4.5 trillion bond portfolio. Dudley stated that despite the Fed taking this route, it would not completely deter it from keeping with its current rate hike schedule. The Fed still expects to perform at least two rate hikes in 2017. This was a huge negative for the Dow. That is because the notion of a looming Fed rate hike, boosts the dollar. That in turn causes the Dow to trade lower.

The dollar index traded higher by 0.5% to 101.16, and that marked a 3-week high. Even the USD/JPY pair traded higher on Dudley’s comments. The USD/JPY inched higher by 0.3% to 111.16. The dollar is highly correlated with the Dow. When the dollar trades higher, the Dow has a hard time posting gains and vice versa.

Global Tension

The Dow didn’t only have economic data to contend with. It also had to trade based on the Syria attack. On Thursday night the U.S. led an airstrike on Syria. It had sent up to 59 Tomahawk missiles to the Shayrat air base near Homs.

The reason for the U.S. doing this was in response to a chemical attack launched by Syria on a rebel held area. Dow futures were as low as 100 points overnight but managed to recover most losses.

Still, the Dow was unable to post any gains on Friday. The global tension between the US. and Syria could possibly have a negative effect on the Dow over the next few weeks.

What Binary Options Traders Should Watch For

There are a few things traders should watch.

The first of which is to track the next jobs report. While the data came in lower than expected for this month, next month might bounce back. One bad month doesn’t mean a complete meltdown in job growth. That is evidenced by the fact that the unemployment rate still fell to 4.5%.

The second item would be how the Fed acts in terms of interest rates. In order for the Dow to trade higher, there would have to be a considerable pause in rates being hiked. The Fed wants to stick to its rate hike schedule, but bad economic data could change those plans.

The final item that traders should keep an eye on would be the global tension between the US. and Syria. Further escalation could result in the Dow trading lower. That is because traders will not hold on to risky assets in the face of uncertainty.