U.S. stocks markets are trading flat ahead of this morning’s ADP Employment Report. Expectations are for this report to show that 30,000 jobs were lost during the last month. This is better than the 84,000 lost in December. Today’s ISM Non-Manufacturing Index Report should be a market mover today. Traders are looking for this index to cross over the important 50 barrier. A number higher than 50 indicates upside momentum.

The March E-mini S&P 500 is on target to test a major retracement zone at 1109.25 to 1118.25. A retracement to 1084.00 must hold if tested. The March E-mini Dow has an upside target of 10341. Look for support on a pullback to 10130. The March E-mini NASDAQ is lagging behind the two other markets. This markets needs to regain 1774.50 to show strength.

April Gold surged overnight to $1126.40 before backing down. This price was inside of a retracement zone at $1120.50 to $1131.40. A weaker Dollar is necessary for this market to continue its rise. If the Dollar strengthens, then look for a pullback to $1100.40.

March Treasury Bonds are under pressure overnight as traders await today’s ADP Report and the Treasury refunding announcement. A good employment number will pressure bonds along with the news that more supply is hitting the market. The bigger picture still indicates that March Bonds are finding resistance inside a major retracement zone at 118’24 to 119’24. Continuing to close under 118’24 indicates weakness that could trigger a break back to 116’06.

Demand for higher yielding assets and a weaker Dollar is helping to support March Crude Oil. Today’s petroleum inventory report should be a market mover. Traders are looking for an increase in supply, but could be surprised because of the recent pick-up in manufacturing. A new main range at 84.45 to 72.43 has been formed which could trigger a retracement to 78.44.

The U.S. Dollar reversed early session weakness and surged to the upside following the release of better than expected U.S. economic news.

This morning’s ADP Employment Report showed that fewer jobs were lost during January. This lent credibility to the notion that the economy is improving and that Friday’s Non-Farm Payrolls Report may actually show positive jobs growth.

January’s ISM Non-Manufacturing Index crossed the 50 marker indicating that momentum was turning to the upside.

Traders reversed the course of the Dollar, indicating that investors were shifting their focus away from risk and on improvement in the U.S. economic outlook. Global currency markets sold off as demand dropped for higher yielding currencies. Both reports supported the Dollar because they provide the Fed with more information needed to begin raising interest rates.

Thin trading conditions continue to highlight the Forex markets ahead of tomorrow’s Bank of England and European Central Bank policy announcements. Trading is expected to continue to be muted following these two central bank meetings as traders will then begin adjusting positions in front of the U.S. Non-Farm Payrolls Report.

The March Euro reversed course after testing a minor 50% retracement level at 1.4023. Today’s weakness is a pure economic play. The release of upbeat U.S. reports supports a stronger economy. The recent rise in the Euro was attributed to easing tensions. On Thursday, the European Central Bank is expected to announce that interest rates will remain steady.

The GBP USD spiked to the upside last night on the news that U.K. consumer confidence rose more than expected. Speculators have also been driving this market higher on the notion that the Bank of England members will provide a more hawkish opinion on the economy in tomorrow’s policy statement. Today’s stronger U.S. economic reports are putting pressure on the British Pound at the mid-session. Downside momentum was strong enough to push this market through the first downside target at 1.5960.

The USD JPY is rallying sharply higher. Improvements in the U.S. jobs and non-manufacturing sector have encouraged traders to focus more on the recovering U.S. economy rather than the weaker Japanese economy. Earlier this morning, the USD JPY tested support at 90.03 before turning around. The next upside target is 91.45.

The stronger U.S. economy and the weaker Euro are helping to put pressure on the Swiss Franc, triggering a rally in the USD CHF. Last night, a key 50% level at 1.0504 held following a test. Upside momentum is strong enough to trigger a rally back to the recent high at 1.0642.

The USD CAD is rallying sharply higher following a sell-off in commodities, led by weaker gold and crude oil. Falling demand for higher yielding assets is also putting pressure on U.S. equity markets. The short-term charts indicate a rally to 1.0633 to 1.0653 are the next likely upside targets.

A drop in demand for higher risk assets is helping to pressure the NZD USD. The current short-term range sets up a likely retracement to .7072 to .7054.

The AUD USD is weakening after stronger U.S. economic reports drove traders into the Dollar. Yesterday’s low is still holding, but today’s friendly economic news moves the Fed closer to raising interest rates. This is pressuring the Aussie since a hike in U.S. rates will tighten the interest rate differential between the two countries.