This morning brought the release of Non-Farm Payrolls data for the month of December, and this release perhaps carried a bit of extra importance after the December FOMC[1] rate decision. At that meeting, Chair Powell shared that the FOMC[2] was opening the door to tighter policy options in 2022, largely in response to the persistent inflation that continues to run through the U.S. economy. The one sticking point was the same item that the bank has been tracking since early 2021 and that’s the continued recovery in the labor market.
During the press conference of the December rate decision[3] Powell said that the bank was waiting for confirmation of full employment in the U.S. economy before making any adjustments to rates. This week saw the release of meeting minutes from that rate decision and the large takeaway was a Fed that’s now more open to both a faster tapering of asset purchases and faster rate hikes. Markets have responded by pricing in a median of 3-4 hikes this year out of the Fed, even after the bank highlighted a possible 2-3 hikes at the December meeting.
This morning’s Non-Farm Payrolls came out at 199k with an unemployment rate of 3.9%.
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--- Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX[4]
DailyFX[5] provides forex news and technical analysis on the trends that influence the global currency markets.
