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The Forex Daily Digest – December 3, 2009

The USD regained most of its earlier losses, after comments from European Central Bank President Jean-Claude Trichet about U.S. officials' support for the U.S. currency. A variety of U.S. data also left currency traders with little direction before the main event on Friday: the government's monthly payrolls report.

The ISM's nonmanufacturing index fell to 48.7 from 50.6 in October. Economists surveyed were expecting the index to rise to 51.5. The dollar was under pressure after the Labor Department said 457,000 Americans filed initial claims for unemployment benefits in the latest week, down 5,000.

The EUR rose against the USD and posted its biggest gain in a month against the JPY as European Central Bank President Jean-Claude Trichet announced the first steps toward scaling back emergency stimulus lending. The EUR was up to nearly its strongest level in 16 months versus the USD after Trichet said the need for such stimulus measures has diminished.

The CAD fell after European Central Bank President Trichet called for a strong U.S. dollar, prompting traders to purchase the greenback to cover short positions. Meanwhile, Canadian employers likely added 15,000 workers in November after a decline of 43,200 in the previous month. Statistics Canada is scheduled to release the data at 7 a.m. (ET) tomorrow ahead of the U.S. Nonfarm Payrolls report.

China’s Commerce Minister said the world should pay more attention to the stability of the USD rather than the value of China’s yuan, as the two currencies’ effect on the global economy is incomparable. Yuan forwards were little changed today on speculation China will resist international pressure to resume appreciation in the currency until exports fully recover.

On the economic calendar Friday watch for the Nonfarm Payrolls report for November, the November Unemployment Rate, Hourly Earnings and Average Workweek figures. And at 10am (ET) the October Factory Orders report will hit the street.

On Friday’s earnings calendar, scheduled reports include Big Lots, the Berkeley Group, the Royal Bank of Canada and Sirona Dental Systems.

Happy trading,

James Dicks

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