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The markets were being driven yesterday by huge swings in European Interest Rates. The moves came from the Bank of England (BoE) and the European Central Bank (ECB). The BoE slashed their benchmark Interest Rate by 150 basis points. This was 100 points more then the market had forecasted. Their intent is to boost economic growth and reduce the likelihood of a prolonged recession by stimulating consumer spending and reducing mortgage rates.

The GBP/USD shed almost 150 pips and came very close to an intra-day low of the 1.5500 mark. The greenback also made a jump against the EUR but closed down against the JPY. The JPY has continued to see gains as the markets reevaluate the USD/JPY support lines.

The unusually large Interest Rate cut by the BoE sent a clear message to the market that the British economy may be in deeper trouble then preciously expected. Rising unemployment and slowing consumer spending are strangling the economy. Combined with a lower Interest Rate, the GBP is becoming a less attractive investment after the Rate Cut.

A new report from the International Monetary Fund about global growth shows that growth prospects were dimming for the U.S. economy. The world’s largest economy may see a recession as early as next year. A reflection of this is the recent report that U.S. productivity slowed sharply during the third quarter despite efforts by businesses to keep it aloft by slashing payrolls. Productivity came out at 1.1% annual rate in the third quarter which is a significant drop from the second quarter’s 3.6%.

As for today, all eyes will be on the U.S. Non-Farm Employment Change report that is expected to post 200K less jobs for October. The change comes on the heels of job losses of 159K in September. The U.S. Non-Farm report could reverse the initial market optimism following the election of Barack Obama as U.S. president. The news surrounding this important event may have more influence in the market today, driving the Dollar potentially to the 1.2900 level.

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Yesterday, the greenback saw mainly volatile sessions against its currency counterparts. After the significant appreciation the USD went through on Tuesday, it managed to preserve its relatively high rates.

The USD kicked off yesterday’s trading session with an unexpected boost, as Automatic Data Processing announced that July’s Nonfarm Employment Change report showed a gain of 9,000 jobs in the private sector, well above expectations for a loss of 58,000 jobs. The USD then rose to a 4 week high against the EUR, as the EUR/USD dropped to 1.5523. However, soon after, a dramatic rebound in Crude Oil prices took place. Oil rose by $4 a barrel, crossing the $127 level, and drove the USD back to its original rate before the Employment Change publication.

Today has the makings for a huge news day in the US and for the Greenback. At 12:30 GMT we will likely see strong volatility, as 4 different leading indicators are due. The most important of the events will be the Advanced Gross Domestic Product, which is forecasted to reflect a 2.2% raise as opposed to the same time last year. Another significant indicator will be the U.S Unemployment Claims that are expected to decrease from 406K in the previous week, to 395K.

As most of today’s U.S data is expected to give positive figures, traders must keep in mind that tomorrow the Nonfarm Unemployment Change, one of the most influencing USD indicators, is forecasted by analysts to show an increase of 75,000 jobless individuals. Such results should outcome in a massive volatile session in the next couple of days as markets should experience large fluctuation which could deliver some fantastic opportunities to gain profits. Traders are well advised to take advantage of it and end this week with nice profits.

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