Employers in the US have cut considerably more jobs than expected, cutting 95,000 jobs leaving the current unemployment rate in the US at 9.6%. Following this announcement the global stock markets have declined pulling back some of the gains gathered this week so far.

The US markets are seen by most traders as a leading indicator to the rest of the Western World. Most traders would expect the USD to gain on the risk aversion fall out from the US Non Farm Payroll’s release. The USD has had a volatile day and is yet to establish a clear direction, GBP/USD trades under 1.60 with another test looking likely in the nearterm. EUR/USD looks set to retest 1.40 with some anaylsts suggesting that a continuation of trend could quickly see the 1.50 mark in the next month.

ECB president Jean Claude Trichet is bucking the trend toward easing monetary policy, headlines have recently depicted a global currency war taking place in a race as countries race to devalue their currencies.“The ECB is standing at the edge of the battlefield and is happily allowing others to fire on it without any sign of self-defense,” said Klaus Baader, co-chief European economist at Societe Generale SA in London. Many countries are attempting to depreciate their currency in order to boost economic activity and international trade. Of course this causes substantial friction when they all try to do this at the same time.

Quantitative Easing will inevitably devalue the USD, YEN, and GBP. If Trichet continues with his current stance, the Eurozone will undoubtedly suffer from further strengthening adding to pressure on their economic recovery.

Looking towards next week, the minutes of the FOMC Septemebr meeting will provide a point of interest for traders as markets continue to monitor the prospects for QE. A number of Fed members will also speak over the next week and market participants will monitor the tone of their comments closely.

Support and Resistance

GBP/USD – Support 1.5670 / Resistance 1.6018
GBP/EUR – Support 1.1296 / Resistance 1.2015

UK Economic Releases

JPN – Health & Sports Day, Market Holiday
US – Columbus Day – Market Holiday (Stock Market Open)
FRA 0745 – Industrial Production
ITL 0900 – Industrial Production
IRL 1100 – Manufacturing Production