Nonfarm Payrolls Set to Grow Moderately in December as Markets Assess Fed Rate Cut Bets

Core Viewpoint - The upcoming Nonfarm Payrolls (NFP) report for December is expected to influence the US Dollar's volatility and provide insights into the Federal Reserve's policy direction for the new year [1]. Group 1: Nonfarm Payrolls Expectations - Economists predict a rise of 60,000 in Nonfarm Payrolls for December, following a 64,000 increase in November [2]. - The Unemployment Rate is anticipated to decrease to 4.5% from 4.6%, while annual wage inflation is expected to increase to 3.6% from 3.5% [2]. Group 2: Private Sector Payrolls and Employment Index - The ADP report indicates a rise of 41,000 in private sector payrolls for December, recovering from a 29,000 decline in November [3]. - The Employment Index of the Institute for Supply Management's Services PMI rose to 52, indicating a return to growth after six months of contraction [3]. Group 3: Federal Reserve's Interest Rate Outlook - The US Dollar ended the year positively, with expectations that the Federal Reserve may maintain interest rates at the January meeting despite a dovish stance in December [4]. - Current market pricing shows less than a 15% chance of a 25-basis-point rate cut this month, but employment data could affect the likelihood of a rate cut in March, currently estimated at around 45% [5]. Group 4: Federal Reserve Officials' Comments - Richmond Fed President Thomas Barkin emphasized the need for careful rate decisions due to risks to unemployment and inflation, noting the low unemployment rate [6]. - Minneapolis Fed President Neel Kashkari remarked on the cooling job market and the potential for the Unemployment Rate to increase [7].