US dollar jumped on the non-farm payrolls headline but it was a mess afterwards
The December non-farm payrolls report was very strong and led to the unemployment rate falling to 4.3% from 4.4% in a surprise twist.
Here is WSJ Fedwatcher Nick Timiraos after the release:
The January jobs report cements the Fed's extended pause on interest rates. Powell on Jan. 28: "The economy has, once again, surprised us with its strength—not for the first time." Attention now shifts to the turn-of-the-year price resets in the CPI
The release is particularly surprising given misses in ISM services, ADP, JOLTS job openings and other employment metrics. That skepticism might explain some of the choppy moves in the US dollar afterwards.
AUD/USD initially fell to 0.7071 but has quickly recouped all the decline and more, rising to 0.7117.
Similarly, USD/JPY rose to 154.65 only to fall all the way back to 153.84. That pair has been sold all week in light of the election win from the LDP in the Japanese Lower House.
Elsewhere, the moves are more of what you would expect. EUR/USD is down to 1.1863 from 1.1900 and cable is down to 1.3647 from 1.3680. But even those moves are smaller than the kind of 'gamechanger' headline we're seeing here.
Part of the reason might be the steep downward revision to 2025 employment rolls that removed 858K jobs. The report also noted that there are 500K more unemployed people in the US than there were at this time last year.
Others are talking about the difficulty of seasonally adjusting in January, which is always a large negative number without that.
On the face of it though, the Timiraos take is the right one. This will sideline the Fed for longer barring some arm twisting from the new Fed chair. A cut in June had been fully priced in but that's now at 76%. We also see Treasury yields up 4-7 bps across the curve.
S&P 500 futures are up 0.6%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
AI boom reshapes the wafer foundry landscape! UBS: Explosive demand accelerates advanced process expansion, mature process enters upward cycle
UBS stated in a recent research report that within the foundry market, the Total Addressable Market (TAM) for the N2 (2nm) node far exceeds expectations, A14 (1.4nm) production expansion is accelerating, and the upcycle for mature process nodes has already begun.
$1,999 Foldable iPhone Is Ready, but Apple (AAPL.US) Faces Over $5.7 Billion Patent Penalty
As Apple intensifies its efforts in foldable displays and AI business, it faces a haptic technology patent compensation ruling exceeding $5.7 billion. On September 25, a federal jury in California found that Apple's Taptic Engine, used in certain iPhone and Apple Watch models, infringed on two patents held by Taction Technology.
Prospects for the opening of the Hormuz Strait are overshadowed, Asian bonds under pressure: 2Y Japanese bond yield approaches 2%, 3Y Korean bond yield rises to highest level since 2022
With high oil prices, short-term bond yields in South Korea and Japan have risen.
5% US Treasury pressure weighs on global assets, while Australian government bonds open up a window for allocation? Fixed income giant Pimco calls the rate hike expectations too aggressive
Pacific Investment Management Company (Pimco) holds a constructive view on Australian bonds, believing that market expectations for rate hikes are too high. Pimco stated that the rate hike cycle in Australia has been "fully priced in," and cracks are beginning to appear in the economy, making Australian bonds look attractive, especially in the 5- to 10-year segment of the yield curve.
Crypto prices
More
