Chuck Butler, President of  EverBank® World Markets and author of The Daily Pfenning newsletter, offers his analysis of this week’s currency trends – and their implications for the global economic recovery – at The Daily Reckoning.

Chuck Butler (The Daily Reckoning):

Japanese Canaries in a U.S. Economic Coal Mine

Yesterday I told you how the overnight markets were selling dollars, and the NY traders were buying them, causing these swings in the currencies. The trading ranges aren’t huge in any sense of the imagination, but, they do cross significant levels each time… For instance, the euro (EUR) has crossed back and forth through the 1.51 level four times this week, and the Swiss franc (CHF) has crossed back and forth through parity a few times this week.

Yesterday was no different than the trading theme we’ve seen this week… When I signed off yesterday morning, it was a “full on” risk day… But the NY traders saw differently, and took profits. In the overnight markets, the commodity currencies have rebounded.

The main event today is the Jobs Jamboree… The forecasters are pretty adamant that the job losses will show that they are dwindling… And the media will be all over that like a cheap suit… But what they will fail to see is the fact that there probably aren’t that many jobs left that can be cut! Not without the US having soup lines… So, it won’t be as if things are getting better as the media will try to shove down our throats… Instead it will be simply a rearranging of the deck chairs on the Titanic. We’ve gone from 600,000 job loss months to 125,000 job loss months… When did 125,000 job loss months bring about parades and confetti? Expect the jobless rate to remain at 10.2%, and that should tell you all you need to know.

If the trading theme remains in place that has sent the dollar to the woodshed whenever there is good data, because it tells traders and investors that the global recovery is on better terra firma, and that the paltry yields in the US should be thrown to the side of the road, and higher yields found in countries like Australia, Brazil, New Zealand, Norway, etc.

Wait, I started a thought there, and went off on a tangent… If the trading theme remains in place, and the Jobs Jamboree prints as expected, and the media begins throwing confetti, the dollar will end the week getting sold… But that all remains to be seen.

I told you yesterday that the markets were waiting for European Central Bank (ECB) President Trichet’s, statement following the rate announcement. It was thought that Trichet would keep rates unchanged and then announce that stimulus was being removed from the economy, Which, in essence is about the same as a rate hike, for it will slow the economy, just the same…

Click here for the rest of Mr. Butler’s article at The Daily Reckoning.