All attention will turn from Europe’s troubles for a day as traders look forward to two important pieces of US economic data.  Both the ADP employment report and the scheduled Federal Reserve meeting will likely come with a bit of volatility, adding to an already tense market environment.

For its part, the employment survey published by private payrolls company ADP could give risk sentiment a boost.  The survey is anticipated to show a positive increase in payrolls – lending to an even more optimistic non-farm payrolls release later in the week.  Correlations between the two reports continue to exist, leading some to consider the ADP results as a hint of what’s to come in the US monthly unemployment report.  For the month of October, the survey is estimated to report an addition of 102,000 positions.  This is higher than the 91,000 witnessed in September, and the third six figure increase in the last five months – a potentially positive sign for the slumping labor market.

However, should the report show less than positive results, it may increase speculation that Federal Reserve policymakers will implement a QE3 program.

Although probabilities for implementation are slim, the potential for US Federal Reserve officials to make mention is relatively high.  According to speeches and previous minutes, policymakers have been toying with the idea of another round of quantitative easing.  But, this time, the program may be directed solely at mortgage rates – lowering the national benchmarks and placing more money directly into the US consumer’s pocket.  This differs from previous attempts directed at lowering the long end of the US treasury yield curve.  As a result, traders will likely position themselves on those hints and innuendos, rather than the interest rated decision itself.

Source:  www.forexmarketshot.com