All Eyes On The Nonfarm Payrolls.

The US Dollar traded with mixed results yesterday as another day of economic data left a cloud over the straining US economy. Today we look ahead to critical US data, namely Non-Farm Payroll, which should map the direction the dollar will take after a week of important economic data. After the 50bp rate cut from the Federal Reserve earlier this week, investors shifted focus toward the greenback. Yesterday saw the release of a basket of key news events from the US that shaped the day’s trading behaviors. Core PCE Price Index, ECI, Personal Spending, and Unemployment Claims were all released at 13:30 yesterday within expected forecasts. Unemployment Claims returned at 375K, rising by just under 70K to reach its highest level since October 2005. Finally, to end the US news day Chicago PMI returned with less than stellar results, but did not have a big affect on the day’s trading. Today NonFarm Payrolls is on tap. It will play a huge roll in determining the effectiveness of the 150bp accumulated rate cut since the last payrolls were released. Fed Chairman has noted on several occasions that the Labor market was an important part of the economic slowdown. Early indications put the payroll figure at just under 70K, which according to many investors will not be enough to revamp the greenback. More importantly for the short term is that the other key dat figures set to be released today are all dollar negative. Consumer sentiment, manufacturing ISM, construction spending and average hourly wages are all set to return with negative results, as they represent the more unstable sectors of the US economy. If Non Farm Payrolls returns with greater gains than initially forecasted, we should see a steady rise in the dollar in the short term.