Markets anticipate US labor market data for January 2026

Tomorrow marks this year’s first report release of the US labor market, with 66k new jobs expected to have been added to the US economy compared to the previous reading of 64k. As for unemployment, it is expected to fall to 4.5% from 4.6% MoM, while wages grow by 0.3% from 0.1% on a monthly basis. All of these readings are considered critical, as they provide a more holistic view of an economy that is engulfed by recession fears due to a weakening labor market.

Expected scenarios based on analysts’ forecasts & their impact on stock indices, gold, and the US dollar

Scenario #1: Non-Farm Payrolls (NFPs) coming in above expectations.

If the NFP reading comes above 66k, this will signal a strengthened employment state and increased wage pressure. This will have a positive effect on both the US dollar and stock indices, with limited gains for the latter, as such a scenario might indicate that interest rates will remain high for longer periods of time. As for precious metals like gold an silver, they will likely face downward pressures as appetite for safe havens diminish with a stronger labor market.

Scenario #2: Non-Farm Payrolls (NFPs) coming in below expectations.

Any recorded fallback in employment numbers and wage growth will lead market sentiment to shift for the worse, with fears of a US economic recession taking shape and growing. US stock indices and the US dollar will be negatively affected, while gold and silver will have a positive outcome. Such a scenario will lead to a more accommodative monetary policy and lower interest rates.

Impact of US Labor Market Report on upcoming Fed decision

The Federal Reserve is set to meet at the end of this month, with markets anticipating a pause on rate cuts. However, tomorrow’s NFP results might change that. A higher than expected NFP reading and weaker wage growth signal a stubbornly resilient inflation, thus a lower chance of cutting rates further. On the contract, a lower-than-expected report tomorrow will indicate that the labor market has indeed started to get affected by higher rates, thus forcing the Fed to cut rates more than expected earlier.

Conclusion

Tomorrow’s labor market report will give us a clear look into the health of the US economy, which will have a direct effect on the performance of US stocks, the US dollar, gold, and silver, as well as monetary policy expectations. Still, inflation data released next week will have the last say. It will tell us how resistant inflation still is and the future Fed interest rate trajectory.