The U.S. unemployment rate fell below 4 percent in December and wages jumped despite weaker-than-expected nonfarm payrolls growth, further evidence of a tight labor market that is expected to support a Fed rate hike as early as March. The U.S. Labor Department data on Friday showed the unemployment rate fell to 3.9% in December and wages accelerated. Nonfarm payrolls increased by 199,000, with upward revisions for the previous two months. The labor force participation rate was flat. The latest data shows that while demand for workers remains strong, many factors hindered companies from hiring until the end of last year, such as unsupervised children, fears of the epidemic, and increased savings to buffer. The omicron, which has led to record new cases in recent days, also poses a risk to employment growth in early 2022.

San Francisco Fed President Mary Daly said she prefers to raise interest rates "gradually" while shrinking the balance sheet at a faster pace than in the previous tightening cycle. "I would prefer to gradually adjust policy rates and shrink the balance sheet earlier than in the last cycle," she said Friday during a virtual panel discussion at the American Federation of Social Sciences Congress. "I don't want to do both at the same time," adding that "you can imagine adjusting the balance sheet after a rate hike or two."

Expectations of a March rate hike, which were not mainstream just a few weeks ago, are starting to ramp up sharply following a fall in U.S. unemployment and the latest signs that the Federal Reserve is eager to taper stimulus. “It’s hard not to conclude that the labor market is very tight. We think Fed officials will come to the same conclusion, and it may be difficult to wait until June for the first rate hike as we originally expected,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. said in a report on Friday. "We now expect the first rate hike in March and then quarterly."

Inflation in the euro zone accelerated and surpassed existing records, shattering expectations for a slowdown and complicating the task of ECB officials who cling to a tentative approach to inflation. The euro zone's consumer price index rose 5 percent in December from a year earlier, up from a 4.9 percent gain in the previous month and above the 4.8 percent median forecast of economists polled by Bloomberg. Inflation excluding volatile items such as food and energy was 2.6 percent, in line with November's reading.

In the South African city where the mutant omicron strain was first recorded, a study of Covid-19 patients at a large local hospital found that the wave of infection was spreading at an "unprecedented" speed while causing much milder symptoms than previous strains. The researchers, who analysed data from the Steve Biko Academic Hospital in Pretoria, said this could indicate an end to the Covid-19 pandemic. South African data is being watched closely for the potential spread of omicron around the world. omicron first caused a severe outbreak in South Africa. "If this pattern persists and plays out globally, we may see a complete decoupling of case numbers and mortality," the researchers said. This suggests that "omicron may herald the end of the epidemic phase of the new crown global pandemic and enter the local phase."

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

JRFX is an online CFD broker providing more than 50 products for Forex, metals and commodities. Open a trading account within a minute. Deposit 100USD and download our MT4 trading platform now!