Payrolls Collapse, Dollar Steady on Rising Middle East Conflict

The US Dollar Index (DXY) held above 99.00 during the New York trading session on March 6, maintaining stability even after the release of a deeply disappointing Nonfarm Payrolls report. Safe-haven demand supported the greenback as tensions surrounding Iran intensified, helping cushion the impact of the weak labor market data.

Data released by the U.S. Bureau of Labor Statistics showed the unemployment rate unexpectedly rose to 4.4% in February from 4.3% previously. Meanwhile, Nonfarm Payrolls recorded a loss of 92,000 jobs, a sharp contrast to market expectations for an increase of roughly 58,000 jobs.

The steep decline was largely attributed to a four-week strike involving healthcare workers. The protests—primarily concentrated in California and Hawaii—marked the largest strike in the history of the US healthcare industry.

The strike ended on February 24, 2026, after the healthcare service company Kaiser Permanente agreed to wage increases and several other demands from the workers. With the strike now resolved, experts expect payroll numbers to rebound in the coming months, particularly as employment indicators from other sectors continue to point to relatively solid labor demand.

David Rees, chief global economist at Schroders London, stated that the sharp decline in payroll is likely to reignite debates among proponents of loose monetary policy at the Federal Reserve. However, he noted that much of the negative surprise in the report appears temporary, driven largely by the healthcare strike and likely to reverse in subsequent data releases.

According to Rees, despite the weak headline figures, the underlying fundamentals of the US economy remain solid and could support a renewed pickup in labor demand in the near term.

The money market showed a shift in expectations for the Fed's monetary policy. Traders now anticipate the next interest rate cut could arrive in September, earlier than the previous forecast of October. Nevertheless, the total easing projection by the end of the year remains around two rate cuts with an accumulation of 40 basis points.

Iran Conflict Limits Market Reaction

The market reaction to the disappointing payroll report was relatively limited as the change in Fed rate expectations was not significant. Additionally, rising geopolitical tensions in the Middle East reinforced the U.S. dollar's appeal as a safe-haven asset.

In the last 24 hours, Iran has reportedly increased attacks on Israel. Meanwhile, Israel continues to bombard Tehran while expanding military operations into Lebanon.

US President Donald Trump stated via his Truth Social account that there will be no deal with Iran unless the country surrenders unconditionally. In a separate statement, Trump also threatened to impose a full trade embargo on Spainafter Madrid rejected Washington's request to use the Morón and Rota military bases for operations targeting Iran.

These developments triggered a sharp surge in energy prices. Brent crude oil jumped more than 8% intraday, climbing above $90 per barrel. Analysts are now beginning to consider the possibility of oil prices exceeding 100 US dollars per barrel, a scenario that could spark a new energy crisis and intensify global inflationary pressures.