US Dollar could recover some recent losses due to better employment report for November

Yesterday's better than expected US ADP employment report for November saw the creation of 93,000 new jobs, while October's figure was revised up to 82,000 from 43,000. The data encouraged some market participants to predict that Friday's US non-farm payrolls figures could exceed expectations by some way and today's weekly jobless figures could build on that optimism, helping the US Dollar to recover some recent losses.

In the UK, Sterling slipped back despite manufacturing PMI in November rising to a 16 year high of 58, and with construction PMI data due at 9:30am today, the hope is that this will be similarly buoyant, with a figure of 51.3 expected.

The Euro though continued to recover last night and the US Dollar slipped back on a report that the US would be willing to back an even larger European stability fund by increasing its commitment to the IMF, though quite how they would do that given their own deficit problems is not quite clear.

In any event this was denied by a US treasury official but the report came on the back of speculation that the European Central Bank could potentially take strong steps at its monthly rate meeting today to ease concerns about the debt crisis unfolding in Europe.

Expectations are for no change in interest rates which won't surprise, however markets will be paying close attention to Trichet's tone with respect to continued low interest rates, as well as any splits within the European Central Bank given that some members are known to be opposed to accommodative monetary policies.

There is not much other data out today however, the data that is due out has the potential to cause some volatility.