A significant deviation in January’s U.S. non-farm payrolls (NFP) data from market expectations could spark sharp volatility across foreign exchange and bond markets, according to Hassan Fawaz, a strategist at GivTrade.
In a research note cited by Jin10, Fawaz said recent signs of cooling in the U.S. labor market have raised the stakes for the upcoming jobs report. He warned that an unexpected outcome—either weaker or stronger than forecast—could lead to abrupt repricing in the U.S. dollar and Treasury yields.
“If the data is weaker than expected, it may reignite market concerns about the momentum of the labor market,” Fawaz said, adding that such a result would likely reinforce expectations for monetary policy easing later this year and put downward pressure on the U.S. dollar.
Conversely, he noted that a stronger-than-expected NFP print could challenge those easing expectations, supporting the dollar and pushing Treasury yields higher as markets reassess the outlook for interest rates.