In December, the number of job openings in the US fell to 6.542 million, a decrease from November’s revised 6.928 million. Both hires and total separations remained nearly constant at 5.3 million each.
Separations included 3.2 million quits, while layoffs and discharges were approximately 1.8 million. Revisions for November showed 218,000 fewer job openings, with hires increasing by 6,000 to 5.1 million and separations rising by 64,000 to 5.1 million.
Currency Movements
Regarding currency movements, the US Dollar Index (DXY) showed minimal change, remaining near 97.70 after the job openings data release. The US Dollar strengthened against the British Pound, showing a 0.72% increase.
When analysing currency exchanges, the US Dollar and Japanese Yen showed a modest increase of 0.02%. Meanwhile, the British Pound weakened by 0.72% against the US Dollar. The heat map provided illustrates these changes across various major currencies, demonstrating their percentage differences.
The JOLTS report from late 2025 showed a significant drop in job openings to 6.54 million, far below the 7.2 million that was expected. This was a clear signal that the labor market was cooling faster than anticipated. The downward revision for November’s data further confirmed this softening trend.
Impacts on Federal Reserve Policy
Looking at more recent data from our current perspective, the January 2026 Non-Farm Payrolls report released last week showed job growth of only 110,000, continuing the weak trend seen in the JOLTS data. This confirms that the slowdown in labor demand is not an isolated event. This pattern is creating a strong narrative of economic deceleration.
This sustained weakness in employment data directly impacts Federal Reserve policy expectations. The probability of an interest rate cut in the second quarter has likely increased, with current fed funds futures now pricing in over a 60% chance of a cut by June. This is a noticeable shift from the sentiment we saw at the end of last year.
However, we must also consider that core inflation remains somewhat persistent, with the latest CPI reading still hovering around 3.5% year-over-year. This creates a difficult situation for the Fed, which has to balance a weakening labor market against inflation that is still well above its 2% target. This conflict between slowing growth and sticky inflation is a key source of market uncertainty.
For interest rate derivatives, this suggests positioning for lower yields in the coming weeks. We should be evaluating call options on Treasury bond futures, as their prices will rise if the market continues to price in more aggressive rate cuts. This strategy allows us to profit from the expectation of a more dovish Federal Reserve.
In currency markets, the prospect of earlier Fed rate cuts should put downward pressure on the US Dollar. We should therefore consider buying call options on currency pairs like the EUR/USD and AUD/USD. These positions will benefit if the dollar weakens against its major trading partners.
The outlook for equities is more complex, as rate cuts are supportive but a slowing economy is a headwind. This uncertainty suggests a potential rise in market volatility. Consequently, purchasing call options on the VIX index could serve as a valuable hedge against a potential market downturn triggered by worsening economic data.
