The US Labor Report brought more discouraging employment news today as for the third month in a row, jobs continued to evaporate. In August, 54,000 jobs were lost, lifting overall unemployment to 9.6 percent from 9.5 percent.

The one bright note was the private sector created more jobs than expected during the month with 67,000 new positions filled. The net result however, was still negative adding further to worries that increasing unemployment could derail any recovery.

Source: Reuters

I published this report on FX360.com this morning (if you haven’t read it already)

Sterling in currency trading

The U.K. pound is still struggling overall in forex trading on the currency market. Earlier today, sterling saw a sell off in currency trading.

However, for now, the U.K. pound appears to be doing better. The better than expected payrolls data out of the U.S. appears to be helping high beta currencies as risk appetite returns.

The long wait is over! The Bank of International Settlements (BIS) has just released the results from its Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity, conducted in April 2010. The report contains a veritable treasure trove of data, perhaps enough to keep analysts busy until the next report is released in 2013. [Chart below courtesy of WSJ].

Better industrial data out of China and the surprising ISM print in the US has every, already confused trader, becoming ‘more lost’ in whatever convictions they have left. At least we have the NFP crap-shoot still to come, that is bound to surprise. We may give up all we have gained in a heart beat this week and we would be none the wiser! Interpreting trading strategies is like a new form of ‘ping-pong’, back and forth with risk appetite. This morning the EUR remains king and has managed to extend its gains in the wake of a well received French and Spanish auctions.

New claims for jobless benefits for the week ending August 28th fell by 6,000 to 472,000 compared to the previous week. Employment remains a concern as companies hold off on hiring on fears that the economy could slow further in the second half of the year.

“The rate of layoffs is still uncomfortably high,” said Chris Low, chief economist at FTN Financial in New York. “This continues to feed the unemployment rolls. We see no reason to expect an acceleration in consumer spending.”

The best reason to buy euros is because this man likes ‘em! Premier Wen Jiabao, the leader of China said last night that China and Western Countries should work together to enhance the world’s confidence in the euro and the European Union’s economy. China will be working directly with Spain on this initiative as Wen invited Chinese investors to invest in Spain’s financial, renewable resources and electric cars industries, the report said.

Kathy Lien, director of currency research at GFT Forex, on what to expect from the currency markets.

The monthly ADP Employer Services survey shows that US employment fell by 10,000 during the month of August, the first monthly job loss since January. This flies in the face of a survey of economists that forecast a gain of 15,000 jobs.

Month end flow beats logic, even option expiries and market fix’s beat logic. Yesterday’s stronger US data wilted in its glory as individuals eager to accumulate EUR’s waited in the wings. Stronger manufacturing data out of China and Australia last night is yet to convince the market to go all-in before we get to see the employment data in the US. The market is nervous and lacks conviction proven by the trading strategies being employed thus far this week. Yesterday’s Fed minutes did not exude acute dissension amongst its members to the degree the market had been expecting.