No real change in US markets overnight despite an earlier sell-off, as investors hedged their bets ahead of this afternoon’s eagerly anticipated December payrolls report. Despite a move lower during yesterday’s session stocks closed back near to their previous closing levels, as Q4 earnings season gets under way. This week’s FOMC minutes had something for both the doves and hawks, but one fact seems inescapable, in that a good payrolls number will shift the markets attention to the Fed meeting at the end of this month and the potential for a further $10bn of tapering on top of this months $10bn. It also means that investors are more likely to be picky about valuations with any vulnerability likely to be pounced upon. While this weeks ADP numbers have undoubtedly raised the temperature regarding another taper in February, US bond markets saw 10 year yields slide back from the 3% level yesterday, suggesting a paring back of long US dollar positions in the event we get a disappointing number today. There were no surprises from either the Bank of England or the European Central Bank yesterday, both leaving policy unchanged, however it is slowly becoming apparent that the ECB’s next policy move is likely to be in the opposite direction to both the Federal Reserve and the Bank of England. Despite this the euro continues to hold up well simply because the longer the ECB and Draghi talk about additional tools without actually doing anything diminishes the effect. You can only tell the market so many times you have a loaded gun until eventually you have to prove it, and woe betide if the gun contains blanks. In any case the main event today is the non-farm payrolls report and expectations for this afternoon’s US employment number are for 197k, down slightly from November’s 203k, but given some of the recent strength seen in recent ISM and PMI data we could see a number well north of 200k. We shouldn’t forget that we could also see significant revisions to the previous two months and they are also quite likely to move the dial. The unemployment rate is expected to remain unchanged at 7% while we should also keep a close eye on the labour participation rate which last month edged back up from 62.8 to 63, still near a 35 year low. In the UK the strength of the recovery in Q4 is set to come under scrutiny with the release of ONS November manufacturing and industrial production data. Given that we saw extremely strong PMI readings in this particular month it would be surprising not to see two very positive numbers here. Expectations are for a 0.4% rise on both measures on a month on month basis, annually up to a rise in excess of 3%. We should also expect to see similarly positive November construction output numbers with a year on year rise to 7.5% expected, from 5.3%. EURUSD – the 100 day MA at 1.3550 continues to act as support with another aborted test yesterday and as such the current uptrend from the lows at 1.2760 remains intact. A move below the support has the potential to open up further losses towards 1.3475. Only a break below the 1.3475 level would then argue for a move to the lows in November at 1.3300 and 200 day MA. The key resistance remains at 1.3885, which is long term trend line resistance from the all-time highs at 1.6040. GBPUSD – the pound continues to look well supported pushing slightly above 1.6480 and heading back towards 1.6500, while on the downside we find key support lies at 1.6320 trend line support from the 1.4815 lows in July. Only a break below 1.6250 retargets a move back towards 1.6110. While above this key support level the potential for rebounds back to 1.6520, and the highs last week remains, however last weeks daily bearish engulfing candle does raise the risk of a slide back towards the 1.6000 level. EURGBP – continues to look weak making another 11 month low at 0.8232, the risk remains for a move towards the 0.8160/70 area which is a 61.8% retracement of the entire up move from the 2012 lows at 0.7755 to the highs last year at 0.8815. Only a move above 0.8330 delays the prospects of a weaker euro. USDJPY – the US dollar continues to look a little soft and is currently struggling to move back above the 105.10 area. The Ichimoku cloud support on the four hour chart is still acting as support but the risk appears to be shifting towards a possible drift lower. Momentum does seem be stalling and a fall below cloud support at 104.60 could bring about a move towards 103.70. The 105.50 area the 61.8% retracement of the entire down move from the 2007 highs at 124.20 to CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.