There is a strong probability that US employment will again fall very sharply for the latest month and the net risk suggests a slightly weaker than expected report, although there is no sense in looking to forecast the data. Although overall risk appetite remains firm following the G20 summit, there is likely to be some reassessment of the deal as there were no specific measures to deal with bad debts in the banking sector. Stock markets will also be vulnerable to a correction following sharp gains. In this context, the best strategy looks to be to sell into any Euro strength following the report.

The US labour-market data has remained extremely weak with ADP reporting a record 742,000 employment decline for March after a revised 706,000 drop previously. Initial jobless claims rose to a fresh 26-year high of 669,000 week from a revised 657,000. Continuing claims also rose to a fresh record high of 5.73mn in the latest week

Given this evidence there is every reason to expect a further very weak employment report on Friday. Before the horrendous decline in employment, payroll changes of around 20,000 away from consensus would ten to trigger a significant reaction, but the market has been desensitised to huge numbers.

The unemployment rate will be watched closely as the impact of falling employment and discouraged workers leaving the workforce could trigger an erratic outcome.