In December, job openings in the US dropped to 6.542 million, down from November’s revised figure of 6.928 million. The number of hires and separations stayed steady at 5.3 million each. Among separations, there were 3.2 million quits, while layoffs and discharges made up around 1.8 million. November’s data was revised to show 218,000 fewer job openings, with hires increasing by 6,000 to reach 5.1 million, and separations rising by 64,000 to also hit 5.1 million.

Currency Movements

For currency movements, the US Dollar Index (DXY) remained steady at around 97.70 following the job openings report. The US Dollar gained 0.72% against the British Pound. When examining exchange rates, the US Dollar and Japanese Yen had a slight increase of 0.02%. In contrast, the British Pound weakened by 0.72% against the US Dollar. The heat map below shows these changes across major currencies and highlights their percentage differences. The JOLTS report from late 2025 indicated a significant decline in job openings to 6.54 million, well below the anticipated 7.2 million. This suggests that the labor market is cooling quicker than expected. The revised November data reinforces this trend.

Impacts on Federal Reserve Policy

Looking at recent information, last week’s January 2026 Non-Farm Payrolls report revealed job growth of just 110,000, continuing the weak trend seen in JOLTS data. This indicates that the slowdown in labor demand is ongoing, painting a picture of economic deceleration. This continued decline in employment data is influencing expectations around Federal Reserve policy. The chances of an interest rate cut in the second quarter appear to have risen, with futures now indicating over a 60% likelihood of a cut by June. This marks a significant change from the sentiment at the end of last year. At the same time, core inflation remains a challenge, with the latest Consumer Price Index (CPI) around 3.5% year-over-year. This puts the Fed in a tough position, needing to balance a weakening labor market with inflation levels still above its 2% target. This conflict between slowing growth and ongoing inflation creates market uncertainty. For interest rate derivatives, this suggests planning for lower yields in the near term. We should consider purchasing call options on Treasury bond futures, as their prices are likely to rise if the market anticipates more aggressive rate cuts. This strategy could help us benefit from expectations of a more dovish Fed. In the currency markets, the potential for earlier Fed rate cuts may put downward pressure on the US Dollar. Thus, we should think about buying call options on currency pairs like EUR/USD and AUD/USD. These positions could profit if the dollar weakens against other major currencies. The outlook for equities presents a mixed picture; while rate cuts are generally supportive, a slowing economy poses a challenge. This uncertainty might lead to increased market volatility. Therefore, buying call options on the VIX index could act as a useful hedge against potential downturns stemming from negative economic data. Create your live VT Markets account and start trading now.

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