Tonight's Nonfarm Payroll (NFP) showed amazing numbers, almost double the previous estimate.

The greenback was the darling of the New York session on Friday (2/February), as the Nonfarm Payroll (NFP) data showed impressive numbers. The US Dollar Index (DXY) shot up by around 0.9% to 103.96 at the time of writing while its rivals were struggling. However, some experts are sceptical about the data.

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Nonfarm Payrolls rose by 353k in January 2024, or almost double the 187k previously estimated. The December 2023 Nonfarm Payroll data was also revised from 216k to 333k.

Other US labour report details were in line. The US Unemployment Rate stabilized at 3.7%, although the previous consensus expected an increase to 3.8%. Average Hourly Earnings grew 0.6% (month-over-month) in January 2024, accelerating from 0.4% in December to more than double the 0.3% estimate.

These data killed market speculation about the prospect of a Fed rate cut starting in March. Analysts increasingly trust Fed Chairman Powell's statements after yesterday's FOMC meeting.

"We think today's payroll report has completely eliminated the possibility of a Federal Reserve rate cut in March," said Matthew Ryan, Chief Market Strategist at Ebury.

"Today's data makes us even more confident in our view that we should wait until the June (Fed FOMC) meeting for the first (rate) cut," Ryan continued, "This early postponement of (monetary) easing would be bullish for the dollar, and we continue to see upside potential for the US currency in the near term."

Many FX traders concurred, with the US dollar soaring in many major currency pairs. NZD/USD and AUD/USD collapsed by around 1%. EUR/USD fell by around 0.6%, while GBP/USD gyrated by more than 100 pips. Meanwhile, USD/JPY flew around 1.25% to 148.25.

Analysts from ING have a slightly different view. They think that the Nonfarm Payroll this time is not in line with US labour data from other sources. The latest ISM survey data on the manufacturing and services sectors, in particular, indicated an increase in layoffs.

ING still expects an early Fed rate cut in May. Analysts will also watch the employment sub-index in the ISM report on the US services sector due on Monday.

CME's FedWatch currently shows a 22% chance for a Fed rate cut scenario starting March -down from 38% on Thursday. A rate cut scenario starting in May has also seen its odds drop from 94% to 71%.