The Job Openings and Labor Turnover Survey (JOLTS) released by the US Bureau of Labor Statistics reported 7.74 million job openings at the end of January, exceeding expectations of 7.63 million. This figure marks an increase from the revised December count of 7.508 million positions.
Hires stood at 5.4 million, with total separations at 5.3 million, including quits at 3.3 million and layoffs at 1.6 million. The US Dollar Index (DXY) fell, reaching multi-month lows near 103.40, reflecting defensive trends in the currency.
Us Dollar Performance
Today, the US Dollar showed varied performance against major currencies. It was strongest against the Canadian Dollar while facing declines against the Euro and Yen, with a reported change of -0.74% against the Euro and -0.03% against the Yen.
The latest JOLTS report signals a labour market that is still displaying a lot of resilience, with the number of job openings surpassing expectations. An uptick in openings compared to December highlights that demand for workers remains elevated, which is generally viewed as a positive sign for economic activity. However, whether this translates into upward pressure on wages and inflation is something that will be closely monitored in the coming months. If hiring remains strong while quits also stay high, it suggests workers still feel confident about job prospects. On the other hand, layoffs at 1.6 million indicate some soft spots in certain industries.
Despite this labour data painting a firm economic foundation, the response in currency markets was different. The Dollar weakened across multiple pairs, with the currency falling to multi-month lows. A drop in the US Dollar Index below 103.50 suggests that traders were either positioned for an even stronger showing in job openings or that the market is more focused on broader Federal Reserve expectations. Given the Dollar’s declines, especially against the Euro, it appears that traders interpreted the data as something that won’t shift the Fed’s current stance in favour of more rate hikes.
Currency movements have practical consequences for derivative positions, particularly in options and futures trading. In our view, the drop in the Dollar Index means that traders holding bullish positions on the currency are now facing tougher conditions. If this downward momentum continues, stop-loss levels near recent lows may be tested, putting more pressure on Dollar bulls. Meanwhile, the stronger Euro position suggests that traders leaning toward that currency may find further justification if upcoming European Central Bank rhetoric remains steady or even slightly more optimistic.
Market Divergence Insights
One of the more interesting aspects of today’s trading session was the Dollar’s divergence against various pairs. It was the strongest against the Canadian Dollar but lost value versus the Euro and Yen. This type of movement highlights how market participants are treating each currency individually rather than moving broadly in one direction against the entire basket. An example here is the weaker Canadian Dollar, which may be partially explained by commodity price movements or other domestic factors. For the Yen, traders seem less inclined to bet against it as Japanese policymakers grow increasingly vocal about currency levels.
Over the coming sessions, the focus should remain on upcoming economic releases, particularly any inflation-related reports and employment figures. If additional data confirms a slowing labour market, Dollar weakness may persist. If, instead, upcoming figures show continued strength, some traders may be forced to adjust positioning. Either way, volatility should not be underestimated.
