Jobless Data Awaits

A quiet day of trading was attained on Thursday as the markets took a cautious tone. This occurred a day after large gains in riskier assets. Equities, including Wall Street, turned in mixed results Thursday. The EUR, GBP, and AUD all found rather tight ranges taking into consideration the previous day’s action. Setting the mood is the probability that contemplation came into the markets after sharp gains made by the likes of the EUR the day before. Today the Non Farm Employment Change numbers will come from the States which will certainly add impetus, but the focus for a large spectrum of investors will remain the European financial saga. Yesterday’s weekly Unemployment Claims were disappointing from the States, and in essence not able to back up the ADP’s Non Farm numbers from Wednesday. This sets up some critical questions regarding what the outcome will be for the Jobless data today, the expectation is a result of 126k jobs added. The official Unemployment Rate is a psychological mark for the American public too and its estimate is a 9.0% reading.

The EUR is faced with large questions regarding banking liquidity, Sovereign Debt yields which remain troubling, and concerns about cohesion. While politicians continue to speak publically in Europe about creating new amendments for the E.U. and its economic unity, skeptics continue to point to the results from the past two years in which plenty of talk has fueled the media but extremely little in reality has been accomplished. Italy, Greece, and Spain remain under a microscope and the harsh reality is that a large amount of hurdles continue to be ahead. Europe will release its PPI data today, but the inflation report is unlikely to even get a whiff of attention as investors continue to look more at Merkel and Sarkozy and their various addresses for public consumption. The EUR finds itself at the higher ends of its recent value and it will be more than interesting to see what types of positions investors will take going into the weekend.

The GBP and AUD remains locked in a trading correlation with the EUR. Not to say that these currencies do not have their own economic foundations and ratios, but the impact from the financial crisis in Europe has created a situation in which investor sentiment is being fueled by concerns regarding the possible impact to global opportunities which will affect growth prospects for the likes of the U.K. and Australian corporations and their economic prowess.

Gold moved in a very consolidate range on Thursday as did Crude Oil. The precious metal has mirrored the USD in many ways the past two months. In other words if the USD is gaining, it is likely that Gold has been declining. Having said that Gold maintains a safe haven status and if the proverbial worst were to somehow ‘hit the fan’ regarding the European debt saga, Gold could come into play and receive strong backing even if the USD is gaining too. Crude Oil has been doing rather well the past two months taking into consideration the concerns about the global economy. Some of this has to do with the political tension that is enveloping Iran, which is a major producer of the commodity.

The JPY produced a nearly stagnant day of movement. The JPY must continue to be watched and it is at a slightly weaker part of its range taking into consideration its strength the past few months. Thus it is possible that in the midterm the JPY may become stronger again versus the USD. Forex and the equity markets are likely to remain quite cautious until the Jobless numbers from the States today.