With European troubles seemingly out of the way for now, currency traders will be focusing their attention on tomorrow’s US non-farm payrolls report.  And, sentiment is widely positive for a higher than expected print of the US employment survey.

According to market forecasts, non-farm payrolls are expected to increase by 95,000 in the month of October.  This is only slightly better than September’s 103,000 payroll addition, according to the Bureau of Labor Statistics.  But, the recent trend in jobless claims may hint at a higher print for the survey.  During the last four weeks, initial jobless claims have been released below figures in September – a good thing for the labor market.  For the record, initial claims in September averaged 413,000 – far above the 4-week moving average in October which stood at around 405,000.  And, October actual claims averaged 401,000.  The fact that claims in September failed to fall any lower than 405,000 does nothing but support positive expectations that the US labor market improved on a month over month basis – lending to the high possibility of an above 100,000 payroll release for October.

The sentiment is also being buoyed by improved employment sub-index readings that were witnessed in both ISM manufacturing and non-manufacturing surveys.  According to the most recent Institute for Supply Management report in the month of October, non-manufacturing employment index readings gained to a mark of 53.3 from a 48.7 in September.  Meanwhile, manufacturing subcomponents showed a stabilization of employment at 53.5.  With both subcomponents ticking up above the 50 benchmark level, it signifies that both sectors expanded on the employment side of things, helping the case for an improved NFP report.

So, should the report be better than expected, traders can count on further upside momentum for major currencies like the Euro and Australian dollar.  But, with a report that prints less than expected, markets will likely be in for a rough beginning to the weekend.