The dollar rises against the safe haven currencies and drops against the euro in the initial reaction. This is a classic “risk appetite” reaction. Eventually, the euro’s gains are erased. Commodity currencies are on the rise, safe havens are falling and the euro and the pound return to the same place after some wild trading.

Non-Farm Payrolls rose by 162K. This is the first time that the Department of Labor reports a rise in jobs in the month that just ended. There was a gain in jobs in November 2009, but this was seen only in a revision that came later – not in the initial report.

The tension towards Friday’s Non-Farm Payrolls continues to mount. The dollar, that had a rough beginning to the week, is correcting the losses. Will this trend continue?

For newbies, and not only them, I recommend reading my 5 notes for Non-Farm Payrolls trading. This is always a very exciting, yet risky event. And this time, there’s an extra element:

• Kathy Lien talks on TV about American and Canadian job numbers and the long term implications. Can’t avoid the very hot topic…
• Larry Greenberg discusses the role of risk aversion and how it’s pushing the dollar higher.
• Macro Man looks at the big picture of the global economy and sees a horror show which he rates the same way movies are rated.
• Adam Kritzer dives into the regulatory mess regarding retail forex. There are so many regulators out there…
• Michael Greenberg provides a monthly retail forex volume report for January and does some hard work in mining the data.
• James Chen present a rather unknown indicator, Guppy Multiple Moving Averages (GMMA).
• James W of the forex articles, supplies a long-term forex trading system.
• Casey Stubbs discusses the value in team work. Yes, also in forex trading, where people usually sit alone next to their computers.

That’s it for now. Have a great weekend!

Australia left the interest rate unchanged at 3.75%, disappointing the markets. The RBA Monetary Policy Statement will give a further explanation to this decision at the start of the day.

Update: These three currencies already fell off the cliff, before the Non-Farm Payrolls on risk aversion. The NFP looks like a win-win situation for the dollar: a rise will show a strong American economy and send the dollar up, and weakness will trigger more risk aversion behavior – the dollar rises as well.

Last month’s Non-Farm Payrolls were disappointing and showed a loss of 85,000 jobs in the US in December. There was one point of light – November’s number was revised to the upside and was positive – 4,000 jobs were gained in November. This is what stopped the dollar from dropping sharply.

British Nationwide Consumer Confidence starts the day early with an expected rise from 69 to 70 points. The Pound hasn’t really enjoyed the good figures it received up to now.

The decision