The dollar found no reprieve in the Thursday session ahead of tomorrow's closely watched February labor report - stumbling to fresh all-time lows against the euro just shy of the 1.54-mark and a 3-year low versus the yen at 102.56. Fears of a US economic recession continue to plague the currency with burgeoning expectations that the FOMC will aggressively cut rates at the March 18th meeting. We look for the Fed to ease rates by 50-basis points to 2.5%, while simultaneously leaving the door open for additional cuts over the coming months.

The US reports released today saw weekly jobless claims fall back to 351k, from 373k a week earlier and January pending home sales flat, versus a 1.5% decline from December. Market attention to turn to Friday's highly anticipated February labor report. Recall January's report sharply disappointed estimates, contracting by 17k jobs. Consensus estimates are calling for payrolls to grow by 25k jobs. However, in the event the non-farm payrolls post another significant job contraction, we look for the euro to power past the 1.55-level. The February unemployment rate is also seen worsening, edging up to 5.0% from 4.9% in January.

Unemployment