4 min readThe December Non-Farm Payrolls (NFP) report has been released, revealing job gains of 50,000 for the U.S., below the 66,000 forecast. There was a downward revision for the two previous months by 76,000, which is significant.
The U.S. unemployment rate fell more than expected to 4.4% from 4.6%. Expectations had been for a fall to 4.5%. Wage growth rose in line with forecasts on a monthly basis by 0.3% MoM. However, rose 3.8% YoY, ahead of the 3.6% forecast.
The data paints a mixed picture amid weaker job creation, particularly following downgrades to the previous month, but a sharp decline in unemployment wipes out expectations for a rate cut this month. The market is pricing in a 0% chance of a 25-basis-point rate reduction in January, down from 14% before the data release. The markets don’t see another rate cut from the Fed until the middle of the year.
After three rate cuts last year, Fed officials see just one rate cut this year. The data doesn’t create urgency for the Fed to cut rates again soon. Bond yields are rising, reflecting this position.
DOLLAR INDEX (DXY):
Following the release of the NFP results, the Dollar Index has erased gains from earlier in the day. The USD traded +0.1% prior to the release and trades -0.02 at 98.60 following the data. On the 4-hour chart, the price falls away from its monthly high, although the uptrend remains.
EURO VS DOLLAR (EUR/USD):
If we take a closer look at the technicals, we can observe how EUR/USD was trading at 1.1645 before the data release, and post the release, we have seen price action push modestly higher to the 1.1655 region. The price continues to trade in a falling channel. However, the doji candle points to indecision, for now.
S&P 500 (SDX):
The S&P 500 has risen after the NFP data result release, as we saw price trading at just above 6930 before the announcement, and currently we are trading just above 6946 at the ay’s high. The price trades above its rising trendline and is pushing towards the record high at 6965.
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