Dollar Up After Payrolls

The U.S. Dollar is trading in favorable ranges against its G10 peers following this morning’s release of employment data for the month of December.

Headline payroll numbers saw a downside miss with Non-Farm Payrolls adding 50k jobs versus the 70k expected, and Private Payrolls adding 37k versus 75k expected. While these numbers indicate weakness in the labor market, we also saw Unemployment come in at 4.4%, down from 4.6% in November. These figures together result in a more or less flat move for the Dollar with no impact on the number of potential interest rate cuts that Traders are pricing in for this year. Eyes ahead are on inflation data to be released Monday.

In other Fed related news, President Donald Trump has indicated that he has selected his intended nominee for new Chair of the Federal Reserve, with Secretary of the Treasury Scott Bessent stating that the announcement could be made this month. Prediction markets no longer have Kevin Hassett as the clear-cut frontrunner, with Kevin Warsh having overtaken him and Christopher Waller still in the race, but in a distant third.

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JPY ⇓

The Japanese Yen is the G10’s biggest loser this morning, falling to its worst level in a year, following reports that Prime Minister Takaichi is considering dissolving the lower house of the National Diet. This kind of political instability has weighed heavily on the Yen as Takaichi has risen to power, and the potential for intervention by the Bank of Japan pushes higher should exchange rates stabilize at levels above their current position.

CAD ⇓

The Canadian Dollar is down against the Greenback this morning following the release of December employment data. The Canadian economy added 8.2k jobs in the month of December, as opposed to the loss of 2.5k that was expected, but Unemployment came in at 6.8%, jumping up from 6.5% in November. This has Traders reconsidering the potential for the Bank of Canada to hike interest rates in the back half of the year.

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