The U.S. Dollar is trading lower ahead of this morning’s U.S. jobs data report.  Today’s Non-Farm Payrolls Report is expected to show losses in October of about 175,000 jobs.  The key will be how investors react if the unemployment rate reaches or exceeds 10%.  Some say this figure is built into the market. 

The U.S. jobs report will set the tone for the day as it represents a way to gauge the health of the economy - namely consumer spending.  This year’s report carries a little more weight than previous reports because it will either back or refute the recent evidence that the economy has turned the corner.  Equity market traders are hoping for a good number ahead of this year’s holiday season. 

On Wednesday the U.S. Federal Reserve announced that it remained committed to its low interest policy for an “extended period”.  This statement can be interpreted by investors as a 30-day free ride in the market until the Fed meets again next month.  This means the possibility of a softer Dollar and greater demand for higher yielding assets. 

Yesterday the Bank of England announced that interest rates would remain at the historically low 0.50% level.  The BoE did increase its quantitative easing program by $41 billion.  This figure came within the range of expectations and triggered a rally in the GBP USD.  The main trend is up and the market is within striking distance of the October high at 1.6691.

The European Central Bank left interest rates unchanged at 1% while ECB President Trichet hinted at the central bank’s exit strategy.  Traders do not expect a rate hike soon but are expecting the ECB to begin withdrawing stimulus over the coming months.  Improving economic conditions in the Euro Zone are showing that stimulus measures are no longer warranted.

This morning the Euro, British Pound, Japanese Yen and Swiss Franc are all trading flat ahead of the U.S. jobs data. The U.S. Dollar is trading higher against the Canadian Dollar.  News that the Reserve Bank of Australia upped its GDP forecast and hinted at future interest rate hikes is helping to boost the Australian and New Zealand Dollars.

Stock Index futures are trading better.  There was a strong surge in Asia as those markets caught up to the big rally in the U.S. market.  European stock markets traded flat.  Traders want to see an improvement in the unemployment picture.  This report is very important to the retail stock sector. 

Treasury futures are trading a little better. A better than expected unemployment report is likely to put pressure on the December Treasury Bonds and Treasury Notes. 

December Gold is trading flat to higher.  This market is still finding speculative support after the rally earlier in the week was triggered by a large central bank buy from India. 

December Crude Oil is trading lower.  Traders are waiting for the jobs report.  An improvement in the jobs picture is expected to trigger a rally as this would indicate the possibility of greater demand for gasoline.

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