Risk seesawed as once again it proved way too painful to carry a long equity position ahead of the Friday US employment data. Stocks would close the day flat in broad terms after being up as much as 0.7% intraday. The US data docket was a touch busier with both the ADP employment report and ISM services released.

The former showed a -20K decline in private payrolls for the month of February and was right on market expectations. Meanwhile, ISM non-manufacturing increased to a better than expected 53.0 from 50.5 the prior month. The main takeaway here was the jump in the employment sub-component to 48.6 from 44.6 and the highest since April 2008. This and other data we have in hand point to a small positive for Friday's NFP, but we are (like much of the market) of the belief that weather will be a significant negative factor. Our base case is that we will see a drop of -75K in payrolls and that there is significant risk that the unemployment rate will edge back up to 10.0% from 9.7% currently.

The price action in EUR/JPY practically mirrored that of equities as the cross traded into 121.70 highs only to pull back towards 121.10 as the close neared. We think this will once again prove the clearest directional trade around the employment number - with better data leading to a higher EUR/JPY and vice versa. EUR/USD meanwhile continued to chop for all intents and purposes. The pair squeezed up about 100 pips to the session highs just below 1.3740 but remains in the recent range established almost two weeks ago. The news on the Greek bailout front remained mixed and we would not be surprised if the pair continued to trade in yo-yo like fashion until some resolution is reached here.