Markets Absorb Strong US Jobs Data Impact on Fed Rate Cut Expectations

Financial markets are digesting stronger-than-expected US employment data that has significantly reduced expectations for Federal Reserve rate cuts in 2025. The robust jobs report defied economist predictions, reinforcing the view that the US labor market remains resilient despite elevated interest rates. This development has sobered market sentiment, with traders now pricing in a more hawkish Fed trajectory. The dollar has benefited from the recalibration of rate expectations, gaining against most major currencies as yield differentials widen in its favor. Risk assets showed mixed reactions as the prospect of higher-for-longer rates weighs against positive economic growth signals. For forex traders, the shifting rate cut timeline suggests continued dollar support, particularly against currencies where central banks are closer to easing cycles.