Blowout Payrolls Challenge Dovish Narrative, Dollar Rebounds With Uneven Momentum

January’s highly anticipated US non-farm payroll report delivered a decisive upside surprise, with job growth nearly doubling expectations and marking the strongest monthly gain since mid-2025. The data decisively push back against recent concerns that the labor market was deteriorating rapidly. Rather than rolling over, hiring appears to be regaining momentum at the start of the new year. The report suggests that underlying labour demand remains firm, even after a period of softer monthly gains through much of 2025.

For policy expectations, the message is clear that there is no urgency for the Fed to move again in March. Futures pricing for a rate cut next month dropped toward 5% following the release, effectively taking that meeting off the table. June remains the earliest plausible window for further easing, but that timeline still looks uncertain. Markets will need additional data before confidently reassessing the path beyond the first quarter.

Equities responded swiftly to the stronger tone. DOW futures jumped over 200 points in early trade, hinting that the index’s record run could soon resume. S&P 500 may now be preparing for another serious attempt at the 7,000 psychological resistance level. Treasury markets moved in tandem. The 10-year yield rebounded strongly after sliding earlier in the week, though it remains unclear whether the move has sufficient momentum to decisively reclaim the 4.2% mark.

Dollar also firmed broadly following the release, though gains were uneven across major peers. The extent of the rebound will likely hinge on broader risk sentiment; if equities extend higher, risk appetite could limit safe-haven demand for the greenback.

Meanwhile, Europe faces renewed trade friction with China. A French strategy report proposed earlier this week either a 30% across-the-board tariff on Chinese imports or a 30% Euro depreciation versus the renminbi to counter a surge in cheap imports. The report, prepared by the Haut-Commissariat à la Stratégie et au Plan, warned that key sectors such as autos, machine tools, chemicals and batteries are under direct competitive pressure, citing sustained Chinese cost advantages of 30–40% and an “undervalued” currency. China responded sharply, with a social media account affiliated with CCTV warning of reciprocal tariffs, and investigations into French wine.

In currency markets, Yen remains the day’s strongest performer for now, followed by Aussie and Kiwi. Loonie is the weakest, trailed by Euro and Swiss Franc, while Dollar and Sterling sit mid-pack.

In Europe, FTSE is up 0.80%. DAX is down -0.22%. CAC is up 0.09%. UK 10-year yield is down -0.001 at 4.517. Germany 10-year yield is up 0.008 at 2.822. Earlier in Asia, Japan was on holiday. Hong Kong HSI rose 0.31%. China Shanghai SSE rose 0.09%. Singapore Strait Times rose 0.41%.

US NFP beats at 130k, unemployment rate dips to 4.3%

US non-farm payrolls surprised to the upside in January, rising 130k against expectations for just 66k. The gain was also well above the 15k average monthly increase seen through 2025.

Unemployment rate edged down from 4.4% to 4.3%, beating forecasts for no change, while the participation rate ticked up 0.1 percentage point to 62.5%. The combination suggests labor supply and demand both strengthened modestly at the start of the year.

Wage pressures also remained firm. Average hourly earnings rose 0.4% month-on-month, above the 0.3% consensus, with annual wage growth holding at 3.7% yoy. For markets, the report challenges expectations of rapid Fed easing and reinforces the narrative of a labor market that remains resilient.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.7645; (P) 0.7666; (R1) 0.7704; More….

USD/CHF’s recovery suggests that fall from 0.7816 has completed, and the corrective pattern from 0.7603 is extending with another rising leg. Sustained break of 55 4H EMA (now at 0.7730) will bring stronger rally to 0.7816 resistance. Though, upside should be limited by 55 D EMA (now at 0.7874). On the downside, below 0.7627 will bring retest of 0.7603 low.

In the bigger picture, larger down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8152) holds.