US employment report today

Two weeks ago scientists released a recording of a San Diego-based Beluga whale, called Noc, telling a diver to get out of the water. Today it's a talking elephant from Yongin, South Korea, making the news. Twenty-two-year-old Koshik has a vocabulary of five Korean words; "anja" (the), "aniya" (leave), "annyong" (will), "nuo" (euro), and "choah" (Greece). A deputation from Brussels visited Yongin recently but the zoo refused their demand that the animal be put down.

The single currency was put down yesterday, though only by two thirds of a US cent. The pound is up by a third of a euro cent and fractionally firmer against the yen. Thursday's best performances came from the commodity currencies; the rand and the Australian, Canadian and New Zealand dollars. All four strengthened by around 0.5%, equivalent to three quarters of a US or Canadian cent.

The reason for investors' sudden interest in the allegedly riskier commodity currencies was a clutch of better than expected US economic statistics. ADP's payroll change number was stronger than expected at 158k, initial jobless claims were fewer than expected, the manufacturing purchasing managers' index (PMI) was slightly higher at 51.7 and the Conference Board's index of consumer confidence was up by four points at 72.2, its highest level in five years.

Earlier in the day the ecostats from Europe had been rather less bullish. Manufacturing PMIs from Britain, Switzerland and Greece came in at 47.5, 46.1 and 41.0 respectively. The All Saints' Day bank holiday meant a postponement of the figures from other euro zone countries.

They will come out this morning instead. National readings for Germany, Spain, Italy and France will precede the pan-Euroland number just before nine o'clock. All of them are forecast be below 50, thus signifying a slowdown. Britain's construction sector PMI, which has no direct parallel elsewhere, is also expected to fall short of the breakeven mark at 49.1.

The real excitement comes after lunch with the US Department of Labor's employment report and the crucial monthly change in non-farm payrolls. In the last 12 months payrolls have risen by an average of 154k per month. The latest six of those months have seen that average shrink to 106k. Today's number is expected to be 125k, with the rate of unemployment ticking up to 7.9%. The Canadian employment data, which come out at the same time and tend to be overshadowed by the US figures, are expected to show between 5k and 10k new jobs and to put unemployment at 7.4%.

This afternoon's US non-farm payrolls number is even more important than usual, in that it comes four days before Americans decide whether to change their president or to hang onto the one they've got. A good number could be seen as helpful to the incumbent's re-election, therefore unhelpful to the dollar because it would increase the chance of renewed quantitative easing. That reasoning is not watertight though; there has been more than one occasion recently when a good number has taken the dollar higher, on the old-fashioned logic that a strengthening economy begets a strengthening currency.

And if that's the way investors are thinking it might be a difficult day for the euro. Have a good weekend.