What to Expect From the Next Nonfarm Payrolls Report

The U.S. nonfarm payrolls report for December is set to be a major event for financial markets on January 9, 2026. Scheduled for release at 8:30 AM ET, the report will include the number of jobs created, the unemployment rate, and average hourly earnings. Market participants are anticipating a moderate increase of 66,000 jobs, in line with the previous month's 64,000. The unemployment rate is expected to remain steady at 4.5%, while average hourly earnings are forecast to rise by 0.3% month over month.

The data will provide important insight into the health of the U.S. labor market, which has remained resilient despite broader macroeconomic uncertainties. A strong reading could reinforce expectations that the Federal Reserve may take a more cautious approach to rate cuts in early 2026. Conversely, a weaker-than-expected report could accelerate the path to monetary easing.

The report will be one of several key economic indicators released on Friday, including building permits data, which measures new construction activity. This offers a forward-looking view of the housing market and potential economic growth.

Why Did This Happen?

The U.S. labor market has shown signs of softening but remains a key pillar of economic stability. December's nonfarm payrolls will follow a series of mixed readings, including a weaker-than-expected ADP private payrolls report in December. The housing market has also shown uneven momentum, with both building permits and housing starts trending downward in recent months.

Analysts are particularly focused on average hourly earnings, as wage growth is a key driver of inflationary pressures. A sharp acceleration in wage growth could signal continued inflation risks, while a slowdown may support the case for rate cuts.

How Did Markets React?

Ahead of the report, the EUR/USD pair has traded in a narrow range near 1.1650, with traders waiting for clarity from the U.S. labor data. A stronger-than-expected jobs report could bolster the dollar, while a weaker reading may support the euro's recovery. The U.S. Dollar Index (DXY) has struggled to extend its recent gains, remaining under pressure amid broader dovish expectations.

Global investors are also watching for any signs of policy divergence between the U.S. and the Eurozone. The European Central Bank (ECB) has indicated that current interest rates are appropriate, with inflation expectations stabilizing around the 2% target. This suggests the Eurozone may not provide a strong counterbalance to dollar weakness in the near term.

What Are Analysts Watching Next?

Beyond the nonfarm payrolls report, analysts are monitoring the broader labor market through weekly claims data. Initial jobless claims rose slightly to 208,000 in the week ending January 3, 2026, indicating a modest increase in unemployment support. Continuing claims also rose to 1.914 million, signaling a gradual shift in labor market dynamics.

The Fed's upcoming decisions will also be influenced by geopolitical developments and global growth expectations. Analysts at FX Street suggest that U.S. Dollar weakness is likely to continue in early 2026, driven by dovish policy expectations and structural shifts in reserve holdings.

Investors are also closely following the semiconductor sector, which has experienced significant gains in 2025. The sector's performance has been driven by AI-related demand and Fed monetary easing. However, there are concerns about over-reliance on a few high-performing stocks and the sustainability of the rally.

The EUR/USD pair faces a critical juncture as it tests key support and resistance levels. A break below 1.1600 could signal further weakness for the euro, while a rebound above 1.1700 may indicate a temporary stabilization. The outcome will depend heavily on the U.S. jobs report and broader macroeconomic trends.