Friday's employment data came in weaker than expectations.  The unemployment rate rose to 5.0% from 4.7% in November.  Median forecasts expected that 70,000 new jobs were added in the month of December.  New jobs grew by only 18,000 in December, which is the worst showing since August of 2003.  Employment growth averaged 111,000 jobs a month for 2007, compared to 189,000 for 2006.  Weaker than expected data from the Labor Department, along with existing concerns over a slumping housing market sent the S&P 500 back to its' November lows.  On Monday the S&P was very volatile as the bulls and bears slugged it out.  The market rallied late in the day to finish only 1.40 points lower. 

 

 

On Thursday the European Central Bank (ECB) and the Bank of England (BOE) will announce their interest rate decisions.  I believe that the ECB will leave rates unchanged at 4% on Thursday.  The inflation rate is still above the ECB's target of 2%, which will probably keep the ECB from cutting rates any time in the near future.  I believe the only reason that the ECB is not raising rates is because of the uncertainty that a slowing U.S. market presents.

 

 

I believe that the BOE will lower rates .25% on Thursday, as the December cut has seemed to be a welcomed "relief".  Tighter credit has put a strain on the economy in the U.K., and does not seem to get better in the near future.  The British Sterling has been in a down trend as of late, and I expect this trend to continue.

 

 

* Traders take note of the Canadian Dollar, this market had quite a correction from its' November highs of 110.00 vs. the U.S. Dollar.  As of this message the Canadian is trading around 99.50.  The Canadian Dollar is adjusting for slowing U.S. and Canadian economies, and even Governor Dodge is saying that the Canadian is fairly priced in the mid-low 90's.  I'm not convinced that in a time of record oil prices that we will see the Canadian Dollar falling much more than it already has.  I am bullish the Canadian Dollar, looking for the 105.00 level as a target.

 

 

 

Edward Burke has more than a decade of experience as a licsensed futures and options broker.  Burke Commodities Corp. was founded on the principle of putting the client first.  Contact us at 1-800-797-2716 or eburke@burkecommodities.com.

 

 

 

*Trading futures and options is risky and not for everyone. One's financial suitability should be considered before investing.  Only risk capital should be used.