Daily Economic Commentary: United States

Risk aversion? Check! Stronger than expected U.S. data? Check! The Greenback got it all going yesterday as it chalked up gains against its major counterparts. EUR/USD closed 18 pips below the 1.4200 handle while GBP/USD edged closer to the 1.6100 level. The only currency that outpaced the Greenback yesterday was the Japanese yen, leaving USD/JPY to close at 76.83.

Another tough day for the markets, eh? After a day of recovering from some of its losses, higher-yielding assets took another plunge with U.S. equities tanking by almost 5%. Meanwhile, gold prices soared to yet another new record high as it brushed past the $1,800/ounce mark.

This time around, concerns about the worsening euro zone debt crisis kept risk-taking at bay. On top of that, investors feared a repeat of the 2008 recession, which forced them to liquidate their riskier holdings. Perhaps traders were still reeling from the extremely dovish Fed statement, which confirmed that economic activity in the U.S. isn’t as good as expected.

Still, the U.S. managed to churn out a better than expected Federal budget balance yesterday. The actual figure showed a $129.4 billion budget deficit, smaller than the predicted $137.4 billion shortfall but still much wider than the previous month’s $43.1 billion deficit.

Today, Uncle Sam is set to release its trade balance report and jobless claims data at 12:30 pm GMT. The trade balance is expected to show a $47.9 billion deficit for June, a tad better than the $50.2 billion shortfall seen last May. Unemployment claims are expected to land at 401K for the previous week, a notch higher than the 400K figure posted the other week.

Due to varied results of economic data released, the dollar’s price action was as mixed as bag of nuts yesterday as it traded higher versus the franc, fell against the euro and the pound, and barely moved versus the yen. By the end of the U.S. trading session yesterday, the U.S. dollar index was sitting at 75.06, a mere 14 percentage points higher from its opening level.

The initial jobless claims report came out better than expected as it showed that the number of people who claimed for unemployment insurance fell to 395,000 from 402,000. Meanwhile, the Trade Balance reported a 53.1 billion USD deficit, significantly higher than the 47.9 billion USD deficit initially predicted and the previous month’s 50.8 billion USD deficit.

Today, two important economic reports are due. The first one, the retail sales report, is slated to come out at 12:30 pm GMT. The market expects retail sales to have increased by 0.4% in July, slightly higher than the 0.1% gain seen the month before. However, the core version of the retail sales report is predicted to rise by only 0.1%.

The second one, the preliminary University of Michigan consumer sentiment survey, will publish at 1:55 pm GMT. It is slated to print a reading of 63.7.

Since risk sentiment has been driving price action, results that actually come in better than forecast could end up hurting the dollar. Stay on your toes traders!

The dollar’s currency hiney got whooped by most of its counterparts last Friday. It lost 21 pips to the euro when EUR/USD closed at 1.4250 and 57 pips to the pound as GBP/USD ended the week at 1.6279.

In this humble, not-so-old man’s opinion, the mixed data that we saw from the U.S. must have not impressed investors.

The retail sales report for July topped expectations when both the core and headline figures came in at 0.5% versus the forecasts which were at 0.2% and 0.4%, respectively. However, the preliminary University of Michigan consumer sentiment report for August plunged to its 30-year low at 54.9 and disappointed market consensus which was for a very modest pullback to 63.2 following July’s reading at 63.7.

Sure, the dollar’s scorecard wasn’t all that bad since it was able to gain against the Swissy and the Loonie. But I think it just got lucky that it’s counterparts had their own problems to deal with too.

Our forex calendar has a couple of reports listed for today so make sure you ain’t snoozin’ when they’re released later if you want to make some moolah.

At 12:30 pm GMT, we’ll get dibs on what businessmen think about the business conditions in New York with the Empire State Manufacturing Index for August. After contracting in July, printing at -3.8, analysts are expecting the report to show some optimism with the forecast up at 0.8.

A few minutes later at 1:00 pm GMT, the TIC report will be released. If you’re planning to buy the dollar, you may want to keep your fingers crossed for a figure better than 30.4 billion USD. This would be bullish for the currency as this would indicate that bigger foreign investment during the month.


Come 2:00 pm GMT, the NAHB will release it’s survey on house prices. Keep in mind that the consensus is for the outlook by home builders to have remained steady with the forecast still at 15.0.

The Swiss National Bank (SNB) implemented a number of measures to halt the appreciation of the Swiss Franc. After lowering target Libor rates to a range between 0.00 and 0.25%, SNB announced an increase of liquidity supply to CHF120b to meet increased demand for the currency. Furthermore, there were comments of possible temporary peg of the Franc to the Euro. To what extent the appreciation of the US Dollar against the Swiss Franc is a result of the measures to counter strengthening of the Franc by SNB?

Oh how the mighty have fallen… again! The great USD declined against practically all its major counterparts yesterday as weak economic data and a solid performance in equities dealt it a one-two combination. As a result, EUR/USD climbed 179 pips to close at 1.4441 just as USD/CHF sank from an intraday high of .7998 to finish at .7856.

Don’t blame it on the a-a-a-a-a-alcohol! Blame it on the Empire State manufacturing index and TIC long-term purchases report!
The Empire State manufacturing index printed a surprise contraction in August, falling from -3.8 to -7-7 instead of rising to 0.5 as many had forecasted. And according to the latest TIC long-term purchases report, foreign investors had no interest in buying long-term U.S. assets in June as the report showed a net value of just 3.7 billion, a far cry from the projected 30.4 billion USD. It seems investors lost their taste for U.S. assets, what with the economy’s gloomy outlook.

The continued strength in U.S. equities was also to blame as stocks posted a gain of over 7% in the last three days. With awesome returns like that, traders have been more inclined to ditch the USD in favor of U.S. stocks.

Today, we’ve got more U.S. to chew on as building permits and housing starts data will be coming out at 12:30 pm GMT. Expect building permits to inch down from 0.62 million to 0.61 million, and housing starts to drop from 0.63 million to 0.60 million. With how the markets treated yesterday’s reports, I’m inclined to believe that the dollar could drop a few more pips if these reports disappoint. Good luck, folks!

Ho ho, it looks like risk was on like Donkey Kong yesterday! Based on Swissy’s 80-pip rise to .7936 and Cable’s 79-pip gain to 1.6462, it looks like markets found it easier to take on risk. What gives?

Well, it definitely helped that the U.S. registered strong economic reports yesterday. For one, the building permits report came in near market expectations at 600,000 in July, while capacity utilization rate shot up to 77.5% in July from its upwardly revised figure of 76.9%. Lastly, the industrial production surprised markets to the upside by printing a 0.9% growth in July, which is a lot stronger than the expected 0.5% increase.

Today at around 12:30 pm GMT we’ll get hold of the U.S. PPI numbers for July, followed by the crude oil inventory numbers at 2:30 pm GMT. Markets are expecting producer prices to flatten to a 0.0% growth after slipping by 0.4% in June, but stay close to your charts in case of surprises!

The dollar was the butt of all jokes yesterday as it was whipped across the board. It yielded ground against both safe havens and comdolls as uncertainties in the U.S. economy continued to dampen demand for the Greenback. Has the dollar lost its safe haven status?

Although U.S. PPI came in above expectations at 0.2% (versus the 0.0% forecast), the dollar simply couldn’t find any buyers. While such a figure would normally alarm investors as it implies stronger inflation, details of the report reveal that the cost of crude goods, led by petroleum and food prices, dropped in July for the third straight month. As a matter of fact, this is one of the reasons why the Fed has more leeway to ease monetary policy further.

Lately, the dollar hasn’t been a popular choice for traders, which has led many to believe that it has lost its safe haven status. You’d expect it to be gaining ground with so much uncertainty surrounding the global economy, but that hasn’t been the case as of late. The U.S.'s domestic problems seem to be too much for even the dollar to handle.

In any case, the dollar will need solid readings from today’s reports if it wants to recover some of its recent losses. Luckily, there’s no shortage of reports to support it today!

At 12:30 pm GMT, the CPI report will be available. Forecasts call for a 0.2% rise to reverse the previous month’s 0.2% decline. At the same time, unemployment claims data will be published. Expect the number of claims to grow by 402,000, up from 395,000 last week.

Then at 2:00 pm GMT, the U.S. will roll out its most recent existing home sales data. Many expect the report to print a healthy rise from 4.77 million to 4.91 million. Meanwhile, the Philly Fed manufacturing index is anticipated to raise its reading from 3.2 to 4.0.

Forecasts for these reports show a bit of optimism for the economy. For the dollar’s sake, let’s hope they live up to their expectations. Good luck, kids!

Ain’t no thang but a chicken wing! With risk aversion taking over the markets, investors bought up the dollar like good ol’ Wingstop wings! EUR/USD closed almost 100 pips lower to finish at 1.4336. Meanwhile, AUD/USD came tumbling down as well, losing 160 pips to end the day at 1.0395.

The wave of risk aversion that hit the markets was due to a combination of factors.

First, concerns about the state of European banks began to creep back in the markets. Word through the forex grapevine is that one European bank had to request an emergency loan of as much as 500 million USD from the ECB.

This led to a sharp selloff in the stock market, with the FTSE and DAX closing over 4% lower, while the Dow dropped by as much as 500 points.

Second, we got a slew of poor economic reports, all of which pretty much came in worse-than-expected.
Unemployment claims came in at 408,000, which marked the bazillionth time that the figure has come in over the 400,000 level.

Existing home sales data was also disappointing, printing an annualized rate of 4.67 million, which was way off the expected 4.91 million figure. This was also a big drop off from June’s strong revised showing of 4.84 million.

The bad news continued when the Philly Fed Index flopped and came in at -30.7. The Ben Affleck-like performance wasn’t only way off the expected 4.0 figure, but it also marked the worst showing since March 2009! Ay caramba!

The only bit of “good news” was that CPI figures came in stronger than anticipated. Over the past month, prices rose by 0.5%. The index was expected to show an increase of just 0.2%. Ironically, this helped boost the dollar as well, as it gives the Fed less reason to be raising rates any time soon.

With no data releases scheduled for today, you might wanna keep an eye out on other markets to help you gauge risk sentiment. If it looks as if equity markets are falling and if gold is reaching for new highs, it may be a sign that risk aversion is still clouding the market, which may give you opportunities to build long dollar positions.

You win some, you lose some. After getting a strong boost from risk aversion, the Greenback had a mixed performance against its major counterparts on Friday. The U.S. dollar consolidated against the Aussie, Loonie, and yen while it managed to score some wins against the pound and the Kiwi. Will it find a clearer direction today?

Traders probably needed to take a breather from all that safe-haven buying on Friday. The U.S. didn’t release any top-tier data then, which also explains its lack of direction.

Today, only the mortgage delinquencies report is due from the U.S. This report is usually considered an indicator of the housing sector’s health, so you better keep your eyes glued to the release at 2:00 pm GMT. Bear in mind that mortgage delinquencies were up by 8.32% during the first quarter and a lower figure for the second quarter could be positive for the U.S. dollar.

Tuesday has the new home sales report on tap and we just might see an increase from 312K in June to 316K in July. By Wednesday, the U.S. will release the durable goods orders data and show a slight decline in the core version of the report. Thursday has the usual jobless claims data while Friday has the preliminary GDP figure on tap. I know it’s the lighter than usual load of economic data for the U.S. but those could still be good opportunities to trade the news!

Yeeesh. With no market moving events coming out, trading was as quiet as a Mr. Bean episode, as most pairs stayed within range. EUR/USD traded within a range of just 89 pips, closing 15 pips lower for the day at 1.4364 while GBP/USD managed to close just 3 pips higher to finish at 1.6468.

One thing I couldn’t help but notice was that stocks bounced back yesterday. Bargain hunters may be going around town, looking for cheap stocks after the steep drop the past couple of weeks. With this in mind, risk appetite may pick up this week, which could mean weaker support for the dollar.

We could see more movement later today, as new home sales data will be available at 2:00 pm GMT. Pipstadamus’ crystal ball predicts that the annualized rate of new home sales rose slightly from 312,000 to 313,000 in July. A better than expected figure may just boost risk appetite, which could spell gloom and doom for the dollar.

Markets anticipate Ben Bernanke’s press conference at Jackson Hole on Friday. Many believe that the Fed is not going to introduce any additional monetary stimuli. However, it is also clear that the faltering US recovery may need more than low interest rates to regain momentum. The possible scenarios range from the announcement of QE3 to no intervention. QE2 was announced at the same time last year. This round of monetary easing had a profound effect on the US stock market fuelling rallies in equities and other asset classes. Relaxed monetary policy also suppressed the value of the US dollar supplying vast quantities of the currency to the money market.
What would be the likely impact of a new round of quantitative easing on the US currency and its exchange rate to other major currencies?

“Down, down in an earlier round, and dollar we’re going down swingin’!” The Greenback lost to almost all of its counterparts yesterday as the market grooved to the talks of further stimulus from the Fed. It gave up 77 pips to the euro, 9 pips to the yen, and 104 pips to the Aussie.

From what I’ve heard around the FX hood, it seems like investors are bracing themselves for the Fed to announce further stimulus this Friday when [Fed Reserve Chairman Ben Bernanke](http://www.babypips.com/forexpedia/Ben_Bernanke) heads to the Jackson Hole Symposium.

Market junkies think that all signs of weakness in the economy that we’ve been seeing warrant further easing from the central bank. To make it even worse, yesterday’s reports only supported this thesis. 

New home sales for July printed at 298,000 and fell short of the 313,000 forecast. Meanwhile, the Richmond manufacturing index showed further decline in activity when it came in at -10 for August following its -1 reading last month. Analysts had only predicted a more modest decline to -7.

Don’t fret yet though. They say that the chances of [QE3](http://www.babypips.com/blogs/piponomics/why-qe3-is-a-real-possibility.html) are very slim… for now.

With that said, make sure you pay attention to the economic reports we have on tap from the [U.S.](http://www.babypips.com/school/united-states-of-america.html) today. At 12:30 pm GMT, the durable goods report for July will be released. Considered as a leading indicator of production, the headline figure is seen to come in at 2.1% while the core report is anticipated to print a 0.3% decline.

If the reports came in worse than expected, we’ll probably see the dollar get sold off again. So watch out!

Aaand the dollar strikes back! With a better-than-expected showing from durable goods orders, the American currency was able to end the day higher against all of its major counterparts, save for the Loonie.

Once again, we saw low volatility across the board as traders await the big Jackson Hole symposium scheduled to begin today. If you look back to last year’s symposium, you’ll see that the exact same thing happened- markets ranged ahead of the meeting. Considering that finance officials often use this as a venue to make market-shaking announcements, it isn’t all to surprising to see forex markets remain range-bound.

In other news, for the first time in a long time, the U.S. printed celebration-worthy data! Yesterday’s durable goods orders report provided relief from the recent series of negative reports as it showed a 4.0% rise (versus 2.1% forecast) in orders last month. Even core durable goods rose much more than expected, recording a 0.7% uptick instead of the anticipated 0.3% fall.

Orders rose on a sudden surge in demand for aircrafts and automobiles. Apparently, Americans just gotta get their hands on them G6s and R8s yo! But on the downside, business equipment ticked down last month, hinting at continued weakness in the private sector.

Looking forward, we have the weekly initial jobless claims report on tap at 12:30 pm GMT. On its own, this report probably won’t do much to move markets unless it prints some ludicrous number. Look for claims to come in at 403,000, down from last week’s 408,000. And as always, keep risk sentiment in check! Peace!

India’s currency closely correlated to stock market
The Reserve Bank of India (RBI) has been working overtime recently to hold down the value of the Rupee. The RBI has been buying dollars for over two weeks in order to make sure exports remain competitive. Nonetheless, the Rupee may still be overvalued by as much as 3%, reckon some analysts. This is largely due to foreign capital inflows, as foreigners have poured money into Indian equities at an astounding rate. Investors are anxiously awaiting the presentation of India’s federal budget, on Febrary 28. If the budget conforms to investor expectations, India’s stock market should continue to hit new highs. Reuter’s reports:
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With the moment of truth for the U.S. only hours away, it looks like traders are placing their bets on the scrilla. The dollar gained against most of its high-yielding counterparts with EUR/USD slipping by 34 pips to 1.4386 and GBP/USD falling by 89 pips to 1.6291.

Was it because risk aversion was also felt in markets yesterday? After all, it was easier for investors to focus on the weak U.S. initial jobless claims report since it was one of the few market-moving reports released. The data showed an additional 5,000 claims from the previous reading, which brought up the initial claimants to 417,000 from its revised figure of 412,000.

Of course, we all know what markets are truly waiting for – the big Jackson Hole meeting today! At 2:00 pm GMT we’ll see the text of Fed Chairman Ben Bernanke’s keynote address to the Jackson Hole symposium. The speech will be watched closely not only because the Fed Chairman is speaking, but also because investors will be watching for any signs of additional economic stimulus. Recall that it was also this time around last year when Big Ben hinted at the Fed’s QE2 program.

Before you snooze in your charts ahead of Big Ben’s speech though, you might also want to trade the preliminary U.S. GDPreport coming out at 12:30 pm GMT, followed by the revised figures of the University of Michigan’s consumer sentiment and inflation expectations at 1:55 pm GMT. Though most of the reports are expected to print a bit lower than their previous readings, significantly weaker numbers might send the dollar tumbling against the other safe havens ahead of Bernanke’s speech.

Good luck in your trades today, kids!

Way to drop the ball! On its big day, the dollar was a big disappointment as it lost massive pips against its major counterparts in light of weaker-than-expected growth and the Jackson Hole symposium. While EUR/USD rallied 110 pips to close at 1.4496, USD/JPY tumbled to 76.69 after opening at 77.49.

The first event to deal a blow to the dollar was the release of soft GDP data. According to last quarter’s stats, the economy grew just 1.0%, just a hair’s width below the forecasted 1.1% growth. While the report did deal a bit of good news by revealing healthier corporate profits, wages, and salaries, it didn’t paint such a pretty picture for consumer sentiment.

Apparently, our bros in America haven’t been in the mood to spend, and this has taken its toll on consumer spending, which only grew at 0.4% last quarter, its slowest pace in over a year. That’s definitely not what you want to hear from the economy’s cash cow as consumer spending contributes around 70% of GDP.
This was so alarming that after seeing such figures, many economists were forced to cut their growth forecasts for the year.

But leave it to Big Ben Bernanke to look on the bright side of things. In his speech in the Jackson Hole symposium, the Fed top dog sounded surprisingly upbeat for the economy. Not only did he NOT signal more stimulus (QE3) as many had anticipated, but he even said his long-term outlook for the economy has become “more optimistic.” Furthermore, he added that the recovery will remain moderate and will probably pick up in the second half of the year. He even said that the Fed will do “all that it can to help restore high rates of growth and employment.”

Of course, right after hearing those words, the markets reacted by buying the dollar back as they unwound their QE3 bets. But as the day wore on, they eventually resold it. Now why did they do that??

One possible explanation is that it took time for the markets to realize that all that Big Ben did was delay the decision for further easing to September, when the Fed holds its next FOMC meeting. After all, Ben never really ruled out QE3, did he? Some describe his words as blind optimism, as Bernanke himself admitted that the Fed cannot guarantee long-term growth. That being the case, many believe the Fed is just buying more time to decide what to do.

Now, the question is, will this continue to drag down the dollar? Well, momentum certainly seems to be siding with dollar bears. But we must also take into consideration any upcoming reports if we want to avoid getting blindsided by news releases.

Today, we have pending home sales data due… Forecasts call for a 0.8% decline after the previous month’s 2.4% uptick. Interested in trading the news? Catch the release at 2:00 pm GMT.

Later in the week, we’ll take a look at more critical U.S. data. We have the FOMC meeting minutes due tomorrow, and the ADP employment report on Wednesday. Thursday picks up with the ISM manufacturing PMI, and on Friday, we have the NFP report on tap. These reports, when taken together, will give us a much clearer picture of the state of the U.S. economy, and in the process, give us a better idea of where we can expect the dollar to go! Good luck, folks!

Kaboom! With risk appetite picking up to start the week, the dollar found itself sinking against higher yielding currencies. EUR/USD finally broke above the 1.4500 handle, while AUD/USD rose nearly 80 pips to close at 1.0654.

Part of the reason why the dollar have suffered could be that traders may be starting to price in additional quantitative easing measures by the Fed. Take note, head honcho Ben Bernanke stayed coy about the prospects of more QE3 at last week’s Jackson Hole Symposium. Some believe though, that decision could be made as soon as the next Fed meeting in late September and may actually be establishing their positions as early as now.

In other news, we got some mixed data from the U.S yesterday.

First, the core PCE index, which is rumoured to be the Fed’s preferred gauge of inflation, came in as expected at 0.2%. Of course this doesn’t really mean much, as it just shows that inflation remains subdued in the U.S.

We got some good news in the form of the monthly personal spending report, which showed that consumer consumption rose by 0.8% last July, which beat the forecasted growth of 0.5%. This indicates that consumers are spending more, which bodes well for the economy recovery. The only problem is that it outpaced the growth in personal income, which came in at 0.3%.

Spending is fine and dandy, but not when you spend more money than you make! That’s what gets you in trouble! Hopefully this is just a one month aberration and income growth picks up in the coming months.

Lastly, pending home sales figures were disappointing, falling a worse-than-expected 1.3%, after projections were calling for a 0.8% decline. This marked the second consecutive month that home sales have dropped, and is indicative of a poor housing market.

For today, we’ve got some top tier data in the form of the CB consumer confidence index and the FOMC meeting minutes, which are coming out at 2:00 pm and 6:00 pm GMT respectively.

The consumer confidence index is projected to print at 52.1, which would mark a drastic drop off from last month’s release of 59.5. Then again, considering all that’s going on in the global economy, it shouldn’t be that surprising that everyday Joes are becoming less optimistic.

The one report I’m looking forward to though is the FOMC meeting minutes. Today’s release will be heavily anticipated as it will give a better glimpse as to the Fed’s stance regarding more QE. If it turns out that less FOMC members are in favour of more stimulus measures, it may just give the dollar the boost it needs to bounce back from its recent defeats!

Dollar trading was as varied as the colors of the rainbow yesterday due to the mixed results of economic data released. While the dollar posted huge gains over the euro and the pound, it fell against the Aussie and the Kiwi. The U.S. dollar index ended the day at 74.36, 24 percentage points higher from the level it opened during the Asian trading session.

On the positive side of things, the S&P/CS Composite House Price Index came in with only a 4.5% decline, slightly better than the 4.7% decrease initially expected. It was also an improvement from the previous month’s 4.6% fall.

On the negative side, the CB Consumer Confidence survey failed to meet the forecast of 52.1 and printed a 44.5 reading only. The Federal Reserve’s meeting minutes also revealed that disagreement with regards to monetary policy has grown. Some members thought that additional easing was necessary while others believed that they should remain conservative.

It seems that the future will be cloudy for now as the Fed remains divided on how they should deal with the U.S.’s very slower-than-expected growth.

Today, there are three reports that you should watch out for. The first one is the ADP’s version of the NFP. It will publish at 12:15 pm GMT later and is predicted to show that 102,000 net jobs were created. The second one, which is the Chicago PMI, will come out at 1:45 pm GMT. It is slated to print 54.3, lower than last month’s 58.8. Lastly is the Factory Orders report. It will come out at 2:00 pm GMT and is predicted to show a 1.8% rise, opposite the 0.8% from last month.

The dollar danced to the tune of risk aversion yesterday as it gained against high-yielding currencies, but lost against its fellow safe havens on mixed economic data. EUR/USD sharply dropped by 88 pips to 1.4366, while USD/CHF plunged to an intraday low of .7995 before capping the day with a 141-pip loss at .8057.

Just when investors thought that risk appetite was creeping in – BAM! They were presented with mixed economic reports from the U.S. The Challenger job cuts report revealed less layoff plans in August, while the ADP report printed at 91,000 when analysts already pegged the figure near 50,000. These employment figures are still weak, of course, but they weren’t as bad as markets had predicted.

Chicago’s PMI data also gave currency bulls a bad moment, but only for a while because the 56.5 reading in August is actually better than the 54.3 index number that analysts were eyeing. Lastly, factory orders in July went up by 2.4%, which is not only better than June’s upwardly revised 0.4% growth, but is also better than the 0.8% growth forecast.

Will the dollar gain more ground against its high yielding counterparts today? At 12:30 pm GMT we’ll get hold of the initial jobless claims report, which will be followed by the ISM manufacturing PMI at 2:00 pm GMT. Both reports will be considered my most investors ahead of the big NFP report this Friday, so make sure you watch out for it too!

Also remember that aside from the U.S. economic reports, markets will also be watching for any signs of more QE from the FOMC members. Word around the hood is that Fed President Lockhart has been stirring up the airwaves with his comments, so stick around for more development on this, aight?

Thanks to risk aversion rearing its ugly head back into the markets, the dollar was able to once again spook pips out of its European counterparts. EUR/USD ended the day 97 pips lower at 1.4269 while GBP/USD closed the day 49 pips below its opening price at 1.6184.

The Greenback was even able to bring snatch pips from the yen when USD/JPY closed at 76.80 after starting the day at 76.57. Impressive, huh?

As it turns out, Europe’s sovereign woes continued to highlight the dollar’s safe haven reputation. It might have also helped that yesterday’s roster of economic reports didn’t disappoint market expectations.

Last week’s unemployment claims report showed that 409,000 people filed for jobless benefits which was what analysts had predicted. On top of that, September’s ISM manufacturing PMI report came in at 50.6. The figure might have come as a pleasant surprise for dollar bulls as market junkies were bracing for a bigger pullback in overall manufacturing activity in the U.S. given the disappointing manufacturing reports we’ve seen in recent weeks.

I don’t think we’ll see a lot of dollar lovin’ today though. Well, at least not until the much-awaited NFP report is released. The employment data for August will probably rock the markets more than the previous releases because the figure would most likely affect the Fed’s stance on monetary policy. Word around the FX hood is that if the report tanks so bad, Big Ben and his buds may just pull the trigger on QE3 soon.

Due at 12:30 pm GMT, analysts have predicted the NFP report to show that a net total of 74,000 people joined the labor market in August. Meanwhile, the unemployment rate is seen to have remained steady at 9.1%.

Make sure you don’t miss it later, ayt? If you’re unsure how to trade this high-caliber report, head on to Forex Gump’s most recent blog post as he cites the possible scenarios for the NFP release. Good luck and may the pips be with you!