PIIGS Return to the Slaughter

St. Louis, Missouri – Friday is finally here… The end of what has been an exhausting week here on the trade desk. The dollar continued to get beat down through most of the trading day but started to rally back a bit in the afternoon. Overnight the dollar actually gained with the highflying Nordic currencies falling almost 1% versus the greenback. The euro (EUR) and commodity-based currencies also sold off a bit, and the sharp rally in both gold and silver stalled. A break in all of the price action was to be expected, but it may not last long as we will get the October US jobs report later this morning.

The report due out at 7:30 CST is expected to show the unemployment rate stayed dangerously close to 10% during last month. If the jobless rate comes in at 9.6% as expected, it would be a record 15 straight months that the rate stayed above 9.5%. The FOMC has tied future QE bond purchases to the performance of the US economy, so a poor payroll number will probably lead to another dollar sell-off. On the other hand, if the employment numbers come in stronger than expected, we could see some traders shift to thinking the Fed won’t have to continue the stimulus for as long as they have announced. But this is wishful thinking, as we all know the Fed is like a 17 year-old teenager whose parents just gave them $100 to go to the mall; the $600 billion is all but spent already, and there will probably be more to follow!!

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