US employers announced 45,849 job cuts in June, according to Challenger, Gray & Christmas, a 53% fall from May\u2019s 97,006. For the first half of 2025, announced cuts totalled 443,604, down 40% from 744,308 in the same period. The report said this was the second-highest January-to-June tally since 2020, and added that 2026 has marked the fourth month this year when cuts were lower than a year earlier.<\/p>\n\n
The US Dollar Index held firm after the data, up 0.2% on the day at 101.35. In an interview with CNBC, Fed official Hammack struck a moderately hawkish tone, with the FXS Speechtracker score at 6.4\/10 versus a historical average of 7\/10, keeping the option of further tightening on the table while pointing to inflation pressures. The broader backdrop remains that labour-market readings feed into expectations for Federal Reserve policy as it balances its mandate on maximum employment and price stability, while other central banks such as the ECB focus primarily on inflation.<\/p>\n\n
We see the US labor market as fundamentally strong, which gives the Federal Reserve a green light to maintain its tight policy stance. The May 2026 Non-Farm Payrolls report showed a healthy addition of 272,000 jobs, and while unemployment ticked up to 4.0%, the labor market remains resilient enough to not cause the Fed immediate concern. This allows policymakers to focus on their primary battle, which remains persistent inflation.<\/p>\n\n
This persistent strength in employment is crucial because core inflation is still proving stubborn, last recorded at 3.4% year-over-year for May 2026. Because wages are a key driver of this underlying inflation, a tight job market suggests price pressures will not ease quickly. The Fed has been clear that it will not consider rate cuts until it sees a sustained move back toward its 2% inflation target.<\/p>\n\n
For us, this reinforces the case for a strong US Dollar in the coming weeks. With the Fed likely to hold interest rates higher for longer than other central banks, the rate differential will continue to favor the dollar. Derivative traders should consider positioning through call options on dollar-centric currency pairs or by using futures to bet on the DXY index, which is currently holding firm above the 105 level.<\/p>\n\n
We are also watching for continued upward pressure on short-term Treasury yields, directly reflecting the market’s pricing of a hawkish Fed. Historically, periods of policy uncertainty like this keep yields elevated, creating opportunities in interest rate swaps and options on Treasury futures. Any data that reinforces the “strong economy” narrative will likely push these yields higher.<\/p>\n\n
The primary risk to this outlook is a sudden and unexpected weakening in the next major employment report due this month. A significant miss to the downside on job creation or a sharp rise in unemployment could force a rapid repricing of Fed expectations. This would likely cause a sharp reversal in the dollar and a rally in bonds, unwinding current trends.<\/p>\n\n\n\n