httpvh://www.youtube.com/watch?v=iyjxUHoNPCI

Thursday brought us a rather reticent trading session after the up, up, up and away gains of Tuesday and Wednesday. We put this down to traders taking profit on positions before today’s volatile Non-Farm Payroll figure and the weekend’s G20 meeting in South Korea.

Risky assets did move higher in the morning session with GBPEUR getting as low as 1.1935 and EURUSD pushing up towards the 1.23 handle. These moves were tempered however by a poor ADP jobs figure from the United States that had traders running to bank gains.

The euro was not helped by news out of Spain either. Yields on Spanish debt have continued to rise to a one year high as the market wises up to the fact that the Greek debt crisis will not go away anytime soon. Italian debt has also risen to an 11 month high and French and German bonds, the bedrock of the EU, are also being pushed higher by investors worried over the cost of these recent financial aid packages. Europe, now more than ever, needs Greece to leave the euro and restructure its debt in drachma or this will only get worse.

The contagion continues to spread meanwhile. Hungary are now staring down the barrel of the debt gun with senior politicians calling the country’s chances of avoiding a Greek-style problem ‘very slim’.

Back in the sunny old UK however it’s all gone a bit quiet. The pound has been boosted by the reversal in fortunes of Prudential but from an economic standpoint it has been a quiet week. Concerns still linger over our debt and ways to combat it; Charlie Bean, Deputy Governor of the Bank of England, has written a very good piece in today’s Telegraph (available here) about inflation and the debt bubble. I recommend a read.

We expect the markets to be fairly quiet with a slight risk-off bias this morning as we head towards today’s main event; Non-Farm Payrolls. This month’s may provide a slight aberration however as the decennial census is being taken at the moment. A lot of short term workers are employed to go door to door to administer this and then let go once done. The prior reading was around 290k and most economists seem to be looking for a figure of around 526k. Anything higher and we would expect the US dollar to strengthen as the US recovery continues apace.

We also have EU GDP at 10.00 (expectations are around 0.2%) and UK Halifax house prices at 09.00.

Have a good weekend.