It’s a thin market, liquidity at a premium, a holiday weekend and now we get a disastrous set of Euro-zone manufacturing data, a day ahead of the highly anticipated NFP report. The market has been slicing through the EUR like knife through butter already this morning, mostly on concern that Euro sovereign-debt crisis may worsen, curbing the demand for the currency and triggering some sizable stop losses that have helped to quicken the downward pace.

The IMF is helping to speed up the EUR downfall by its negative comments on European banks balance sheets. It does not help the currency that the Euro-finance ministers continue to struggle to agree on the details of possible securities for bailout loans for Greece. With these ministers continuing to put their national interests first, nothing will ever be decided.

Manufacturing activity in the Euro-zone fell back into contraction last month (PMI-49), ending a two-year run of growth as activity shrank in France and Italy, two of its biggest economies. The forward looking indicators are also looking suspect. Its expected that US ISM Manufacturing PMI will mark its first sub-50 reading in two-years later this morning. Look on the bright side, that print is still above the 42 levels that would signal recession!

The US$ is stronger in the O/N trading session. Currently, it is higher against 11 of the 16 most actively traded currencies in a ‘whippy’ trading session.

The sky’s been falling in so many times on the euro, difficult to get excited about its latest swoon. Tomorrow’s nfp may give us some clues as what FED may do & so give us some direction for the euro.