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A very busy week of economic releases and central bank meetings comes to an end this morning with the release of US April non-farm payroll and that month’s unemployment rate.   Analysts are calling for a increase in jobs of 155,000 in April compared to March’s increase of 88,000.  

Traders however, are a bit more skeptical after last month’s release had similar expectations, but in reality fell way short.   Another poor number will certainly weigh on the USD as a busy trading week comes to an end.  

The unemployment rate is expected to be unchanged at 7.6%.Part of the traders concern about this morning’s release centers on the ADP report released earlier this week.   That number showed 119,000 jobs added in the private sector last month, compared to expectations of 153,000 jobs added.  

The employment component of the ISM manufacturing number also fell from 54.2 in March to 50.2 in April.   These two releases are being viewed as an alert of possible disappointment in the NFP number.  In currency trading the EUR is taking back some of its losses from yesterday trading above the 1.3100 level in early European morning trading.  

After falling below 1.3050 briefly yesterday the single currency has regained the 1.3100 handle after comments from ECB Governing Council Member Ewald Nowotny boosted the currency.   In comments early this morning he attempted to talk down the likeliness of negative interest rates on deposits arguing that the FX markets “over-interpreted” ECB President Draghi’s remarks.  

Nowotny stated that there is no specific plan in place at the moment in that direction (negative rates).   Negative interest rates would mean that banks would have to pay the ECB to hold deposits.   It is felt moving in this direction would persuade banks to be more pro-active in terms of lending.   The reversal this morning in EUR shows how fragile the “psyche” of traders has become.  

To call the markets at the moment “nervous” would be an understatement.Expect pressure on the USD to continue ahead of the 8:30 am NFP release.   Trader’s concern over a poor number will fuel a “buy the rumor, sell the fact” trading mentality.   The direction today should be pretty simple.   A good NFP will see a stronger USD, while a bad NFP should see renewed USD selling.   Sometimes it’s just that simple.