Yesterday’s delayed January employment report was surprisingly strong, led by a sharp rise in non-farm payrolls (NFP).
Investors had a chance to review a fresh batch of US data, and risk appetite headed higher as the US Dollar has retreated against the major currencies, while equity markets are pointing higher.
Nonfarm Payrolls Hits Seven-Month High
Nonfarm Payrolls paved the way with positive news on the employment front, surging to 130 thousand in January 2026. This crushed the market consensus of 70 thousand and follows a soft revised December reading of 48 thousand. Today’s reading is the strongest since June and raises hopes that the US labor market is showing signs of stabilization after months of soft data.
There was further good news as the unemployment rate eased to 4.3% in January, down slightly from 4.4% and below the market consensus of 4.4%. This was the lowest unemployment rate in three months.
Finally, Average Hourly Earnings jumped to 0.4% month-to-month in January, up sharply from a revised 0.1% in December and above the market consensus of 0.3%. This indicator is closely watched as it is a key gauge of wages and inflation pressure.
Fed Expected to Hold Rates Until June
The Federal Reserve will be keeping a close eye on the strong jobs report, and the data likely will solidify the Fed continuing to maintain interest rates. The markets are expecting a hold at the March meeting but the likelihood of a rate cut in June stands at 61%, according to the CME’s FedWatch tool.
Investors will have another chance to assess whether the US economy is cooling with the release of the January inflation report on Friday. This release was delayed only two days by the shutdown but it is unusual to have the inflation report released at the very end of the week and could mean some volatility from the US dollar on Friday.
US Dollar Lower, Stock Market Starts with Solid Gains
The US Dollar has responded with losses on Wednesday following the strong employment report.
The USD/JPY currency pair is down for a third consecutive day as the Japanese Yen is trading at its highest level in two weeks. At the time of writing, USD/JPY was trading at ¥153.70, down 0.40% on the day. The AUD/USD currency pair is also on a roll as it trades at levels last seen in February 2023. The Aussie climbed 0.69% today, trading at $0.7121.
The US stock market has just opened and has posted gains as investors are giving the employment numbers a thumbs-up.
The Nasdaq 100 Index is up 171.73 points (0.68%) at 25,299.36.
The S&P 500 Index is up 25.46 points (0.45%) at 6971.27.
We hope you enjoyed reading our analysis of the latest high-impact US economic data. If you’d like to trade with one of the best Forex brokers in the world, check out our list.
