Unit Labour Costs in the US rose less than expected in Q4, rising just 0.3% QoQ versus the forecasted 1.5% rise, according to the latest release from the Bureau of Labour Statistics and Department of Labour. Meanwhile, Nonfarm Productivity saw a much larger than expected 6.6% rate in Q4 versus consensus forecasts for a 3.2% rise. 

Market Reaction

Lower than expected labour cost pressure as per the latest BLS/DoL report will ease pressure felt by the Fed to hike interest rates as aggressively in 2022. The dollar has, as a result, been selling off in recent trade, with the DXY dropping from around the 96.20 area to current levels around the 95.60s. Much of this could be as a result of a hawkish reaction to comments from ECB President Christine Lagarde, who didn't rule out a 2022 rate hike.