Major Market Movers: Jobs' Report, With ECB's Call

The clock is ticking, and the count down has started, the fruit of the week is on the wait, and major events are on the queue, and there is no where to run form this flood, the news will cover all markets, and will affect every single trader; it is just the markets' judgment day.

The 4th of July Independence Day holiday in the United Stated moved the famous jobs' report on day earlier, to be just side by side with Trichet press conference that takes place right after the release of the rate decision, creating an incredible duet for markets, as markets are at critical levels all waiting for those event to take a steep direction, and luckily, we have those two events at the same time.

The start will be with the release of the ECB rate decision, who hinted in their last meeting that there will be a slight hike in interest rate to fight inflation which reached to 4% in the euro area, expectations afterwards dominated the markets that we will see a quarter point hike to 4.25%, a step that seems a little bit risky, but as the ECB sees it, very necessary as they want to solve the problem in hand first, which is higher prices, and then deal with others non-shaped problems later, which is slowing growth.

The major concern now is what comes after the decision, what the ECB might say about their future plans for interest rates, and what hints they might give, with oil prices settling today so far above 144$ per barrel, investor will be looking for any word from Trichet to start pricing the next decision and maybe after that, and that's why we need to stay alert for the words.

And what comes after that is a great market sensitivity to the to all growth data from the Euro Area, the ECB will hike rates today yes, but if we investors see any kind of slowing economic growth after that they will start doubting if the decision was right, and if the ECB has led to economy towards contraction with its stubborn hawkish stand, with complete negligence for growth levels, that's what we need to keep an eye on today, and for the days to come after the decision.

Moving to the states, where the famous jobs' report will be the major market mover, not just for the day, but it might create a whole medium term direction in the markets that can keep going for a while, as the jobs' market is now one of the major concern in the economy, if Mr. Bernanke and his fellas wants to emerge from the crisis they are in with the least damage.

The U.S. economy expectedly shed 60 thousands job in June following a 49 thousands jobs losses in May, and confirming that jobs market might stand as an obstacle in the way of economic recovery. Jobless rate is expected to decline slightly after a two decades high at 5.5% in May to 5.4% due to widened labor market in the United States, while average hourly earnings are expected to increase 0.3% same as last month's.

Expectations ranged between -20K and -120K, and between 5.2% and 5.6%, those are the odds in the market, while a very big portion expected to see a loss of 40K jobs, but the main issue is, at what numbers we can still consider the jobs market contracting?? Or we can consider it recovering and will allow a faster growth recovery.

Yes, the jobs market is really important, inflation represents a major threat on the U.S. economy now and all the eyes are turned on it, but wait a minutes, yes we saw some improvement in growth levels, and some expansions in some sectors, but if the labor market did not prove to be recovering, then forget about all those theories about escaping recession and hiking rate to fight inflation, the economy will not detour recession by some tax rebates distributed over a couple of months, the economy needs solid and strong labor market, good wages leading to higher spending, which will increase sales and demand factories to produce more, that's what's called economic recover, and the start should be from the jobs market, and if not, say goodbye to the rate hike notion, and get prepared to meet a very dear visitor named stagflation.

Today's data will definitely send markets in a direction, while dollar is losing ground against all the majors, this might be its salvation, as it can be its curse, so be aware dear reader, because were in for a rough ride today

Crown Forex

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