Brown Brothers Harriman’s (BBH) Elias Haddad notes that the February NFP report will be crucial for assessing whether the US labor market is genuinely strengthening or if January’s strong gains were a one-off. The bank highlights downside revision risks to January payrolls and stresses that labor-market outcomes will drive Fed easing expectations and the US Dollar’s safe-haven appeal.

Labor data to steer Dollar path

"But the real test for Fed funds rate expectations comes today with the February nonfarm payrolls (NFP) report (1:30pm London, 8:30am New York). The data will reveal whether the US labor market is truly on a more solid footing or if January’s strong NFP number was merely a blip. Consensus is looking for +55k job gains vs. +130k in January and the unemployment rate is seen unchanged at 4.3% in February, a tick below the FOMC 2026 median projection (4.4%)."

"The risk is a big revision downward to the solid NFP gains last January because of conflicting signals in private sector job gains. The Bureau of Labor Statistics (BLS) reported the private sector added +172k jobs in January while ADP and Revelio private payrolls were up just +11k and +17.4k, respectively."

"If the NFP data for February are consistent with the stronger job creation and low unemployment rate initially reported in January, it would reinforce the Fed’s cautious easing guidance and add a tailwind to the USD safe haven bid. But a weak February NFP and/or a significant downward revision to the good labor market news of January would rekindle Fed funds rate cut expectations and curb safe haven demand for USD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)