The latest U.S. jobs report for January has delivered promising news, indicating a significant rebound in the labor market. According to the Bureau of Labor Statistics, nonfarm payrolls increased by 130,000, far exceeding the anticipated figure of 65,000. This marks the highest job addition since April 2025. Additionally, the unemployment rate decreased to 4.3%, falling short of forecasts which estimated it at 4.4%.
This strong jobs report has important implications for monetary policy, as it reinforces the Federal Reserve”s position to maintain interest rates. Following the release of the data, Bitcoin experienced a notable rise, pushing above the $67,000 mark after briefly dipping to around $66,000 earlier in the day. This upward movement is particularly interesting given that strong employment numbers are typically seen as bearish for risk assets, yet Bitcoin has shown resilience.
Despite the initial surge, the leading cryptocurrency later retraced slightly, trading just above $66,000. The robust jobs data has led traders to reassess their expectations for a rate cut by the Federal Reserve. Current data from the CME FedWatch tool indicates a 94% probability that rates will remain unchanged during the upcoming March FOMC meeting. This is a stark contrast to the previous week, when market sentiment suggested a 20% chance of a cut due to weaker jobless claims and JOLTS job openings reports.
Moreover, traders on platforms like Polymarket are reflecting similar sentiments, with only a 9% likelihood of a rate cut in March. Most market watchers are now looking towards June, where there is a 73% chance that the Fed may consider lowering rates.
As the market digests the implications of the jobs report, attention is now shifting to upcoming inflation data set to be released on Friday. Federal Reserve officials continue to express concerns regarding inflation, which remains significantly above their 2% target. Notably, Fed Presidents Beth Hammack and Lorie Logan have indicated a desire to pause any further rate cuts until inflation shows signs of decline. Hammack has warned that inflation could persist near 3% for the remainder of the year if current policies are not maintained.
Goldman Sachs analyst Kay Haigh has commented that with the jobs report surpassing expectations, the focus for the Fed is shifting back to inflation metrics. While he anticipates two rate cuts this year, a strong Consumer Price Index (CPI) report could push the Fed towards a more hawkish stance.
