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It was an unusual situation for those traders dedicated enough to stick around for Friday’s active session. Using the term ‘active’ loosely, the global financial markets were hollowed by the Good Friday holiday that is observed by much of the Western world. Yet, despite the thin trading conditions, the fundamental potential that built up through the week was set to culminate with the release of a unique non-farm payrolls report. This was not the typical monthly jobs report that offers a modest improvement in the pace of losses with each passing month. Recent history has shown us that speculators had grown accustomed to regular contractions with a progressively smaller camber. The next step towards a true recovery in labor trends (and consequently overall economic growth) was the inevitable net increase in the monthly payrolls. Technically, this milestone was already met with the release of the December report; but it wasn’t that month’s measure where the positive number was record. Instead, a revision to the November figure would offer an unceremonious changing of the tide. This time around, the official consensus was already aiming high with a 184,000-person net addition. The 162,000 reading would not fall far from the mark. This increase was only the second in the past 27 months and the largest in three years. At the same time, the unemployment rate would hold its course for a third month at a seven-month low 9.7 percent and average hourly earnings contracted 0.1 percent – the first decline in at least four years.

Given the market’s reaction to this data, it would seem that this historic reading was simply an “in-line” figure. However, the immediate lack of reaction is likely less reflective of the quality of the data and more a feature of the session’s thin liquidity. If that is indeed the case, when the equity, commodities and futures traders return to the market next Monday (most European participants will still be offline), risk appetite itself could develop. Through Today’s session, only the dollar was able to respond to the data; and the lack of guidance from a traditional investment point of view would play down the greenback’s role as a safe haven. Come Monday, Treasury Secretary Timothy Geithner’s suggestion that this data indicates the recovery is “self-sustaining” and National Bureau of Economic Research (the group that labels the economic cycles) head Robert Hall’s remark that is was now “pretty clear” that the recession is over will be a considerable incentive for sidelined capital to return to a market seemingly supported by real economic growth. However, calling an end to the Great Recession with this single report is certainly hasty. Through the past two years, the US economy has shed 8.4 million jobs. Not only do employers need to absorb this extraordinary number of people; but they will further need to account for the natural labor pool growth from month to month. What’s more, there is a long way to go before job growth translates into a steady and robust recovery in consumer spending.

With all this in mind, the most important factor in establishing the dollar’s strength (or lack there of) will depend on how aggressive the risk appetite response will be. Should US equities surge and other asset classes follow suit for a delayed response, the greenback will very likely play the role of safe haven. This is not a desirable title when risk appetite is on the rise. On the other hand, should the data’s influence dissipate over the weekend, the currency may very well appreciate on the basis that job growth moves the US further up the spectrum for growth and interest rates expectations. Such a scenario would fit in well with the Federal Reserve’s recently announced meeting to “review” the discount lending rate. More than likely, this meeting will result in another hike to the rate at which the banks borrow from the central bank itself. And, while this does not have the same clout as a hike to the Fed Funds figure, it certainly strengthens the hawkish resolve.