Today's expected Non-farm payroll data from the US has been keeping the Dollar strong with expectations of a positive number giving rise to speculations of an economic and labor market recovery. EURUSD moved down to lows of 1.3620 as EU leaders are set to meet today to discuss the EU debt crisis and the outlook for interest rate hikes diminished with yesterday's Trichet's comments, AUDUSD moved to a one-month high of 1.0196 after the RBA lifted growth expectations and inflation forecast in their quarterly report, USDJPY traded at 81.60 and GBPUSD at 1.6138 down from yesterday's high of 1.6280 after the service sector data.

Yesterday, we had release of the jobless claims which declined to 415,000, service sector data improved to 59.4, the fastest expansion since August 2005, worker productivity unexpectedly increased 2.6% and labor costs reduced by 0.6% giving a strong boost to the Dollar on economic conditions while the Euro lagged behind after ECB President Trichet did not give any clear indications on how to tackle the rising inflation levels of 2.4% as the rates were kept unchanged and said that the rates are appropriate for now and will be watching the inflation levels very closely. Dollar strength was paused after Fed member Kocherlakota said that the US faces 'major headwinds' even as it continues to expand at a 3% rate after Bernanke said that the US needs to see a faster job growth for sufficient time before any policy measures can be taken.

The RBA today increased the growth forecast for the Australian economy saying that it will expand more than forecast as flood rebuilding accelerates, labor market tightening and pressures on wages may be the factors. The RBA raised the GDP forecast to 4.25% for 2011 more than the previous 3.75%, inflation will rose 3% (prev. 2.75%) while resumption of interest rate hikes from the current 4.75% could take place. We are expecting the US non-farm payroll data to show an increase of 146,000 jobs although cold weather and mixed economic data last month could show lower job additions while unemployment rate to increase to 9.5% and the Pound could face more downside as house prices are expected to drop 3%.

As for today we have the UK house price index, Canadian labor market data and the most important US payroll data and unemployment rate forming the economic calendar.