NFP Preview: Is There Actual Upside Potential in Jobs?

NFP Key Points

• NFP report expectations: +66K jobs, +0.3% m/m earnings, unemployment at 4.5%.
• Leading indicators point to a potentially above-expected reading in this month’s NFP report, with headline job growth potentially coming in somewhere in the 80-120K range.
• If the jobs report does beat expectations, AUD/USD could extend its reversal toward the mid-0.6600s or even previous-resistance-turned-support at 0.6600.

When is the December NFP Report?

The December NFP report will be released on Friday, January 9, at 8:30 ET.

NFP Report Expectations

Traders and economists expect the NFP report to show that the US created 66K net new jobs, with average hourly earnings rising 0.3% m/m (3.6% y/y) and the U3 unemployment rate ticking down to 4.5%.

NFP Overview

Economic data releases are finally recovering after the US government shutdown delayed – or in some cases cancelled entirely – Q4 figures. Heading into the latest update on the jobs market, economists believe the US labor market extended its “low hire, low fire” regime in December:

Source: StoneX

As the graphic below shows, traders have relatively high confidence that the Federal Reserve will pause its rate cutting cycle this month, and only a dramatic deterioration in the labor market (e.g. an outright decline in jobs or unemployment rising to 4.7%+) could shake that confidence. As a result, the market reaction to the release could be relatively limited, especially with the potential Supreme Court decision on President Trump’s “emergency” tariffs expected to steal some thunder from NFP 90 minutes later.

One other reason that traders may not react strongly to the release is the structural decline in the NFP survey response rates. As the chart below shows, the BLS has seen response rates decline precipitously over the last decade+, meaning that there is more uncertainty around the jobs figures than in the past:

 

Source: BLS, MNI

As we move through 2026 and beyond, readers should be more skeptical of all survey-based economic data and consider a mosaic of data sources when forming strong conclusions about the US economy.

NFP Forecast

As regular readers know, we focus on four historically reliable leading indicators to help handicap each month’s NFP report:

• The ISM Services Employment subindex ticked up to 52.0 from 48.9 last month.
• The ISM Manufacturing Employment subindex also edged up to 44.9 from 44.0 last month.
• The ADP Employment report came in at 41K jobs, up from last month’s -29K reading, though still below the 49K reading that economists were expecting.
• The 4-week moving average of initial unemployment claims fell to 212K, down from last month’s 217Kreading.

Weighing the data and our internal models, the leading indicators point to a potentially above-expected reading in this month’s NFP report, with headline job growth potentially coming in somewhere in the 80-120K range, albeit with a big band of uncertainty given the limited response rates.

Regardless, the month-to-month fluctuations in this report are notoriously difficult to predict, so we wouldn’t put too much stock into any forecasts (including ours). As always, the other aspects of the release, including the closely-watched average hourly earnings figure and unemployment rate will also impact how markets react to the release.

Potential NFP Market Reaction

	Wages < 0.2% m/m	Wages 0.2-0.4% m/m	Wages > 0.4% m/m
< 25K jobs	Bearish USD	Slightly Bearish USD	Neutral USD
25-125K jobs	Neutral USD	Neutral USD	Neutral USD
> 125K jobs	Neutral USD	Slightly Bullish USD	Bullish USD

Technically speaking, the US dollar is trading near 1-month highs against several of its biggest rivals but near the middle of its 3-month range, leading to a balanced risk profile around the release.

US Dollar Technical Analysis – AUD/USD Daily Chart

Source: TradingView, StoneX

Technically speaking, AUD/USD is in an interesting spot ahead of the jobs release. The pair touched 15-month highs near 0.6800 earlier this week before forming a “Dark Cloud Cover” formation on Wednesday, signaling an intraday shift from buying to selling pressure. This reversal is accompanied by a triple bearish divergence with the 14-day RSI, showing declining bullish momentum and strengthening the case that a near-term top has formed.

If the jobs report does beat expectations, it could scuttle any chance of a January Fed rate cut and call March into question as well, strengthening the greenback. In that scenario, AUD/USD could extend its reversal toward the mid-0.6600s or even previous-resistance-turned-support at 0.6600. A strong jobs report that takes the pair back above its 78.6% Fibonacci retracement at 0.6725 would erase the near-term bearish bias.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX