2026-02-11 14:07:00
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.
AUDUSD 10 mins
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%.
