Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for October 7, 2019. The text below is an excerpt and does not contain the full analysis.
Today’s Highlights
- U.S. Jobs Report Gives Key Insight to Economy: The wage growth figure, expected to be a setback, came in at exactly zero percent. This marks the lowest wage growth in two years.
- Markets React to U.S. Job Report: Markets took a very risk-on attitude at the time of the announcement. Despite all the analysts who were watching the wage gain, the report caused many headlines to conveniently turn their focus to the unemployment rate, which hit 50-year lows.
- Crypto Market Makes a Positive Push: XRP, IOTA, and TRX are outpacing the rest of the markets on percentage gain today. Hypothetically speaking, if bitcoin continues to trail the rest of the cryptos, and if indeed there is a retracement of some of these losses, we could see a recurrence of altseason.
Please note: All data, figures & graphs are valid as of October 7th. All trading carries risk. Only risk capital you can afford to lose.
Traditional Markets
The US jobs report out last Friday did indeed reveal some keen insight into the state of the economy even though the numbers were all over the place.
Let’s break it down…
The headline number, which shows how many jobs were added came in a bit shy of estimates. Overall, the addition of 136,000 jobs is a bit weak but not alarmingly so.
What was seen as a setback is the average hourly earnings that came in at exactly zero percent, which is the lowest wage growth in two years.
What was most surprising though, is the unemployment rate, which is now at its lowest levels since 1969.
How did the markets react?
The market reaction was surprisingly positive. Despite all the analysts who were saying before the announcement that the key figure to watch was the wage gain, it seems that after the number was produced many headlines conveniently turned their focus to the unemployment rate.
Here we can see the markets taking a very risk-on attitude at the time of the announcement (purple circles). Stocks went up, gold and the Yen dropped, and US treasury bonds caught a bid at the market open.
Crypto Greens
Bitcoin continued to test recent support levels over the weekend but as of this morning, the entire crypto market seems to be making a positive push. Here we can see that XRP, IOTA, and TRX are outpacing the rest of the markets on percentage gain today. All three of which seem to have seen significant technical progress recently.
The September 24th crypto market drop did hit bitcoin harder than most of the altcoins, and it seems that since that day some of the altcoins have been outperforming in general. However, if we look at the entire market from the June peak, we can see that double-digit losses are pretty common.
So, while it’s nice to see a lot of green on the short term charts, we need to remember that a) this market is still very correlated and b) it could take some time for these staggering losses to be clawed back.
Hypothetically speaking, if we do continue to see bitcoin trailing the rest of the cryptos, and if indeed we see a retracement of some of these losses, we could have a nice case for a new altseason. For now though, we’re still deep in the muck.
Mati Greenspan can be found on LinkedIn, Twitter, or etoro.
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