Yesterday Was Frustrating; Today Was BAD

Starting today, I'm going to try to update what's going on with the USD each day; just a brief synopsis each day of what I think is going on...The dollar posted gains across the board vs. most of the other major currencies. Asian and European sessions saw the buck move higher, and the rally was extended by the slightly worse-than-expected U.S. jobs report.

For now, the dollar continues to benefit from bad news and suffer from good news. However, with dollar bearishness still strong in the markets, many will probably sell into this dollar rally. The yen was firmer too but outperformed the buck, so dollar/yen fell back through the 96 level. Emerging-market currencies were weaker against the buck. Biggest gainers vs. USD on the day were JPY, PEN, IDR and EGP, while the biggest losers vs. USD were SEK, HUF, AUD, CZK and PLN. Markets were thin today with the U.S. holiday, with very little seen in the way of data or news.

The indices have been trading in a tight range just off the lows all afternoon. I believe we closed at the lows, but volume will be too thin to inspire much confidence in anything. The bulls are not anxious to do a lot of buying with so much negative focus on the employment report today -- that's likely to get a lot of press this weekend and isn't going to help confidence.

The saving grace today is that volume is low, as you'd expect with the long weekend coming up, but the lack of a typical positive holiday bias is troubling. Also, breadth is terrible and we have broken some support levels with the move today. We aren't in great distress, but this is looking like a failed bounce attempt following the breakdown from June 15 to June 22.

You never want to read too much into light trading around a holiday, but this has been unusually poor action and it creates more overhead resistance in the indices. So if we do attempt to bounce again, the bears and sellers will likely be more active on strength.

Going into more detail, a disappointing jobs report prompted sellers to knock stocks sharply lower in the first few minutes of trading. Stocks then locked into an extremely narrow trading range until the S&P 500 slipped below the psychologically significant 900 level in the final half-hour of trading. Following an uninspiring finish to the previous session, stocks had already been showing weakness ahead of the government's latest jobs report, which was released shortly before the opening bell. However, sellers became emboldened when the June Nonfarm Payrolls report indicated that 467,000 jobs were lost last month. That marked pickup from the 322,000 jobs that were lost in May, and topped the 365,000 losses that were widely expected... Meanwhile, the national unemployment rate now stands at 9.5%, which isn't quite as bad as the 9.6% that was expected, but it still marks a 26-year high. According to Reuters, the White House expects unemployment rate to climb to 10% in the next two to three months. Average weekly hours came in at a slightly worse-than-expected 33.0. Since hours often lead payrolls and employers are cutting back hours suggests that hiring remains a long ways off, which will damper consumer spending and hopes of a consumer-led economic recovery... May factory orders made a surprisingly strong 1.2% increase, which bested the 0.9% increase that had been forecast. The stock market attempted to pare some of its losses following the orders announcement, but the disappointing jobs report dominated headlines and overshadowed the encouraging orders data... Since U.S. market's are closed Friday in observance of Independence Day, this session's decline gave stocks their third straight weekly loss. During that time, stocks have shed more than 5%. This session's weakness was widespread as declining issues outnumbered advancers by more than 20-to-1 in the S&P 500... Losses were steepest among energy and financial stocks. They both finished 3.7% lower. Energy was hampered by a 3.7% drop in crude oil prices, which closed at $66.73 per barrel. Crude has fallen for three consecutive sessions. Meanwhile, financials were severely undercut by losses among insurers...Trading volume was extremely light ahead of the long, holiday weekend. Hardly 700 million shares traded hands on the NYSE in what was the most thinly traded session this year....