The last trading day of the week started out rather quietly as the market gears up for another momentous US Non-farm payroll report. Given last month's surprisingly weak number, the consensus is for a rebound in jobs to +185k with the unemployment rate remaining at +6.7%. A stronger than expected figure should give the Dollar a boost but another disappointing result will surely trigger a sharp selloff in the US unit and, more importantly, bring the FED's credibility into question which could have dire ramifications for the financial markets as a whole.
The Euro rallied yesterday as the ECB did nothing and seemed to be quite comfortable with the current state of the economy. Traders were on tenterhooks leading up to the press conference as they expected him to,at the very least, address the threat of deflation that appears to be enveloping the region. While he did acknowledge that inflation was lower, the fact that he emphatically dismissed the notion of a deflationary environment was enough to send the common unit higher. Whether he is in denial or just being a stickler for the mandate that the ECB has been given, this apparent lack of concern was enough to unnerve Euro bears. Perhaps it's the fact that the EU is a monetary union only and, as such, does not have the power to enforce fiscal policies across member states which precludes the ECB from engaging in the type of QE that other nations have embarked on.