Commenting on the market reaction to US Non-Farm Payrolls falling short of expectations, Mike Owens, global sales trader at Saxo Markets, said: “The headline Non-Farm Payroll number falls way short of estimates at +199k vs +447k expected. Nevertheless, it’s a strong report showing evidence of a tightening labour market and justifying the Federal Reserve’s more hawkish stance. “Meanwhile, the December unemployment rate fell to 3.9% vs 4.2% previously and average hourly earnings showed a 4.7% increase year-on-year, which is 0.5% ahead of expectations. These figures add to the conviction that we see the Fed now considering the first interest rate hike in March.”

Rupert Thompson, chief investment officer at Kingswood, said the disappointing gain in non-farm payrolls was “no doubt down to worker shortages caused by Covid”. He added: “However, wage growth remained higher than expected at 4.7%. With unemployment falling and wage growth remaining high, the Fed should not be too worried by the disappointing employment gains and these numbers look unlikely to persuade the Fed to alter its tightening plans and current hawkish rhetoric.”