## Non-Farm Payrolls Data to Be Next Week's Focus, Fed Rate Cut Expectations Face Test

The employment report released on December 16th has stirred global market nerves. This data not only includes the partial figures for October non-farm payrolls but also more importantly completes the full picture of November non-farm employment. The market generally estimates that November non-farm payrolls will increase by 130,000, while October is expected to decline by 10,000, and this contrast itself hints at complex changes in the labor market.

Citigroup economists point out that this seasonal rebound may not necessarily reflect a genuine improvement in labor demand, but rather be the result of statistical adjustments. This judgment is crucial for understanding subsequent market trends.

## Fed Rate Cut Expectations for 2026: The Gap Between Trader Bets and Official Signals

The latest dot plot released by the Federal Reserve shows only one rate cut scheduled for next year, but traders' actual bets point to two cuts. This gap reflects differing market forecasts for future economic trends.

According to real-time data from CME FedWatch Tool, the market believes the next rate cut is most likely to occur in April 2026, with a probability of 61%. George Catrambone, head of Fixed Income at DWS Americas, states that the labor market will be a key variable in determining interest rate policy, which is why the non-farm payrolls data released this Tuesday is so closely watched.

However, there are also voices urging caution. Kevin Flanagan, Head of Fixed Income Strategy at WisdomTree, believes that due to government shutdown disruptions affecting data collection, the reference value of this week's report may be limited. The real focus should be on the December non-farm payrolls report to be released by the U.S. Bureau of Labor Statistics on January 9, 2026.

## Chain Reaction of Non-Farm Data on Forex, Stock Markets, and Precious Metals

Market logic has already formed a consensus: better-than-expected non-farm payrolls → prolonged period of unchanged Fed interest rates → USD appreciation → pressure on US stocks and gold; conversely, weak data → increased expectations for rate cuts → USD depreciation → benefits for gold and stocks.

Morgan Stanley forecasts that the USD will decline by 5% in the first half of next year, indicating that the market has priced in ample expectations for a deeper rate cut cycle, and the USD still has potential to weaken further.

However, Citibank holds a different view. The bank believes that the U.S. economy remains fundamentally sound, continuously attracting international capital inflows, enough to support the relative strength of the dollar. The USD cycle in 2026 may see a clear revival momentum.

This divergence in interpretations of non-farm payroll data, Fed policy direction, and the outlook for the dollar is shaping the core trading logic of the market in the coming weeks.