The Bureau of Labor Statistics has revised the US employment numbers for March, reducing them by 911,000 jobs. This is the largest revision ever recorded. As a result, total US employment dropped by 0.6%. While this was a significant change, analysts expected a smaller cut of about 682,000 jobs. Initially, the US dollar fell, but it soon bounced back, and Treasury yields increased as well. **Market Reactions** After the revision, expectations for a 50 basis point cut in interest rates next week decreased. The S&P 500 rose by 18 points to reach 6513, and the Nasdaq reached another all-time high. In the foreign exchange market, the euro faced some pressure due to political issues in France but managed to outperform the Swiss franc. Key economic reports are coming, including the US Producer Price Index and the Consumer Price Index report on Wednesday. Meanwhile, President Trump is advocating for a 15-20% tariff on all EU goods, impacting the EUR/USD exchange rate. In commodities, gold fell by $5 to $3630, while West Texas Intermediate crude oil gained 50 cents, reaching $62.76 per barrel. The Japanese yen appreciated, but the Swiss franc lagged. Despite the big job revision, the market is not betting on a more aggressive rate cut from the Federal Reserve. Traders seem to consider this information outdated and are focusing on the upcoming CPI inflation report instead. They might need to prepare for significant moves in interest rate derivatives, as high inflation could overshadow concerns about the weak labor market. Traders are cautious about anticipating a big rate cut due to recent data, such as the Core PCE Price Index, which stood at 3.5% in July 2025—far above the Fed’s target of 2%. A similar situation occurred in 2023 when the Fed continued raising rates despite weaker economic signals because inflation remained a priority. Thus, betting on a dovish shift from the Fed before the CPI data might pose substantial risks. **Economic Indicators To Watch** With the S&P 500 at 6513 and rising bond yields, there’s a noticeable disconnect that derivative traders should monitor closely. This situation suggests that purchasing protective put options on major stock indices could be a smart way to guard against a possible market downturn. If inflation surprises on the upside, the Fed may need to stay firm, making current equity highs unsustainable. The low cost of this kind of protection is particularly attractive right now. The VIX, which measures market anxiety, has been low at around 12, indicating complacency. Historically, such low volatility, as seen in late 2021, can precede sharp market shifts. In currency markets, the US dollar shows strength due to better yields, allowing it to withstand unfavorable domestic news. Meanwhile, the euro struggles with political uncertainty in France and potential tariffs from the US. This scenario makes bearish positions on the EUR/USD pair, possibly through put options, a sensible strategy for the coming weeks. Create your live VT Markets account and start trading now.

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