The U.S. Non Farm Payroll (NFP) in December 2021 fell. According to a United states Department of Labor report, the NFP will only increase by 199,000 by the end of 2021. 

The figure was well below expectations of 400,000 and down from november's revised NFP to 249,000. Various opinions are then appearing amidst the market participants.

It is not known for sure whether the rise in cases of Omicron variant infections was the cause of the U.S. NFP's sluggishness last month. However, some people believe that it was the reason. 

The report covers only two weeks before the spike in infections occurs in the America which is before Christmas. Nevertheless, the employment there in general is still close to maximum conditions.

The Jobless Rate in the Country Decreased 

The United States unemployment rate fell from 4.2% to 3.9% in December. In the other side, the average hourly wages rose from 0.4% to 0.6%. 

There's been a lot of evidence that the labor market is tightening as said by Stephen Stanley, a chief economist at Amherst Pierpont Securities. What is that condition means? 

The unemployment rate sliding below 4% much ahead of schedule is the highest signal of a tighter employment sector. Then several predictions appear in the market.

Therefore, the analysts expect that the Fed can continue their monetary tightening policy. Although the headline numbers did not reach a consensus, the consensus was not very much an issue for the Fed. 

For them, the data justifies their hawkish tendencies. This thing was said by Brian Jacobsen, a senior investment strategist at Allspring Global Investments in Wisconsin.

The Interest Rate May Increase on March or May

We have to see how they go according to their hawkish talk. However, the likelihood of a rate hike in March or May increases and (so does) a reduction in the balance sheet from the end of next year.

The Dollar Weak After the United States NFP Released. That happened Although the market is still optimistic about the America's employment. The USD remains slumping in response to the release of NFP data this time. The dollar fell 0.52% to 95.73 and was the biggest daily drop since Nov. 26. 

According to the calculations done by Reuters and the United States Commodity Futures Trading Commission, speculators' long positions against the U.S. dollar have indeed fallen in the past week. 

The dollar's net long position was $18.87 billion for the week ended January 4. It means that this currency is lower than the $19.15 billion net long position in the previous week

The Brand New Labor Report 

The December 2021 America's labor report still describes the conditions close to "full-employment". That is although the Non-farm Payroll figures are not as good as market expectations. 

The unemployment rate fell deeper to 3.9 percent than the consensus estimate of 4.2 percent in that country. Inflationary pressures from the labor sector also remain high. 

This is the evident from average hourly earnings growth of 4.7% in December, or outperforming the consensus estimate of 4.2%. It is although weaker than the 5.1% growth in November.

The Monetary Tightening may be Continued

An increasingly close labor market situation of "full-employment" will allow the America’s Federal Reserve to continue its monetary policy tightening plan this year.

That is thus propping up the appreciation of the U.S. dollar. In addition, the market participants expect that the release of US inflation data can bring something. 

They also hope that the testimony from a number of Fed officials in the coming week to support the prospect of a rate hike starting in March.

The Forex calendar shows at least two important events in the next two days. That must be highlighted by the market participants.