On January 12, data released by the U.S. Bureau of Labor Statistics last Friday showed: U.S. non-farm payrolls increased by 50,000 in December, missing the expectation of 65,000 and the previous figure of 64,000. The U.S. unemployment rate was 4.4% in December, compared to an expectation of 4.5% and a previous figure of 4.6%. Following the data release, traders still anticipated the Federal Reserve would cut interest rates by about 50 basis points in 2026, viewing the possibility of a rate cut in January as nearly zero. The Bureau of Labor Statistics stated that the October non-farm payroll figure was revised down from -105,000 to -173,000; the November figure was revised down from 64,000 to 56,000. After these revisions, the combined job gains for November and December were 76,000 lower than previously reported. For the full year, U.S. non-farm payrolls increased by a cumulative 584,000. Analysts pointed out that this marks the weakest annual growth since 2020, when employment plummeted by 9.2 million due to the COVID-19 pandemic. Excluding the abnormal volatility during the pandemic, even looking back at the entire economic expansion cycle from 2010 to 2019, such weak annual job growth had not been observed.
Furthermore, after the non-farm payroll report was released, Nick Timiraos, chief economic correspondent for The Wall Street Journal, often referred to as the "Fed Whisperer," commented that this report clears the path for Fed officials to hold steady at their January meeting. Nick Timiraos pointed out that the three-month average hiring in the private sector fell to 29,000, the second lowest level for the year. For the full year 2025, non-farm payrolls increased by a mere 584,000, the weakest annual performance since the 9.2 million job loss in 2020 caused by the pandemic. The private sector averaged 61,000 new jobs per month, which is the lowest level of private-sector job growth during a non-recessionary period since the "jobless recovery" of 2003. Timiraos believes the December non-farm payroll report solidified market expectations that the Fed will maintain interest rates unchanged at its January 27-28 meeting, while the weak employment data indicates that the debate over the health of the labor market is far from over.
Data to be watched today include the Eurozone January Sentix Investor Confidence Index and Germany's November unadjusted current account.
USD Index The USD Index moved upwards with fluctuations last Friday, breaking through the 99.00 mark and refreshing a 4-week high. The spot rate is currently trading around 98.90. Although the highly anticipated U.S. non-farm payroll report during the period fell short of market expectations, the decline in the unemployment rate, which cemented expectations for a Fed hold in January, was the main factor supporting the USD Index's rise. Additionally, safe-haven buying demand spurred by geopolitical tensions also provided some support for the USD Index. Focus today is on resistance near 99.50, with support around 98.50.
EUR/USD The Euro moved downwards with fluctuations last Friday, recording a slight daily loss. The spot rate is currently trading around 1.1670. The USD Index breaking through the 99.00 mark, supported by expectations of a Fed hold in January, was the primary factor pressuring the Euro lower. However, the generally positive economic data from the Eurozone during the period, coupled with expectations that the ECB's rate-cutting cycle is nearing its end, limited the pair's downside. Focus today is on resistance near 1.1750, with support around 1.1600.
GBP/USD The British Pound moved downwards with fluctuations last Friday, briefly falling below the 1.3400 mark and hitting a 13-day low. The spot rate is currently trading around 1.3430. Besides the USD Index refreshing a 4-week high, supported by market safe-haven demand and expectations of a Fed hold in January, which pressured the Pound lower, the recent run of weak UK economic data has also continued to weigh on the pair. Focus today is on resistance near 1.3500, with support around 1.3350.
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