Traders, investors, and just people people in general have been waiting for the job picture in the United States to improve. Since the stock market low in March 2009 this stock market rally has really been a jobless recovery. According to government standards the unemployment rate in the U.S. is around 9.4 percent. This important number has really not budged in two years, however, the major stock market indexes have bounced back by over 90.0 percent from their 2009 lows. According to the U.S. Debt Clock.org the official unemployed number in the U.S. is 14,402,695(U-3 Total Civilian Non farm Unemployment), however, the actual unemployed is 25,702,348(U-6 Total Unemployed, plus all marginally attached workers, plus total employed part time for economic reasons). Many economist are expecting non-farm payrolls to rise by 140,000 in January after an increase of 103,000 jobs added in December.
Here is the deal. It seems as if the stock market only cares about the action in the U.S. Dollar Index. As long as the U.S. Dollar Index seems to decline the major stock indexes in the United States and Europe seem to rise. Many readers will say that the U.S. Dollar Index an the stock market in the U.S both increased yesterday. While this is true it is important to note that the stock market traded extremely light volume and the U.S. Dollar Index faded sharply from it’s intra-day high. In December 2009 the stock market and the U.S. Dollar Index actually traded higher together. This was because the U.S. Dollar Index started the day sharply higher before the opening bell at the New York Stock Exchange. Please remember that the U.S. Dollar Index trades 24 hours a day, therefore, the U.S. Dollar index will often have already rallied higher and once the stock market opens the U.S. Dollar Index will fade or sell off and the stock market indexes will rally higher. This can happen very easily when the trading volume in the stock market is very light, therefore, it takes a day trader or someone who is following these markets all day to see this and make this correlation.
When the job number is released at 8:30 am EST this morning it will simply matter what the reaction in the U.S. Dollar Index is that will move the market. If the U.S. Dollar Index declines it would be prudent to expect the major commodity stocks to rise. Stocks such as Southern Copper Corp. (NYSE:SCCO), and Cliffs Natural Resources Inc. (NYSE:CLF), and AK Steel Holdings Corp. (NYSE:AKS), could react positive off of a weak U.S. Dollar Index.