Friday 06/12/2012 2.00PM GMT 3.00PM CET

The payroll number today was above consensus but not by much but it is showing the US Economy is making progress albeit slowly on the jobs front which has been a major problem over the last few years.

Employment grew solidly last month and the jobless rate dropped to a near three-year low of 8.5 percent. Non farm payrolls were at 200,000 for December above expectations for a 150,000 rise. There were some adjustments though to previous numbers.

The unemployment rate dropped from a revised 8.7 percent in November, which was previously reported as 8.6 percent. The jobless rate is now the lowest since February 2009. the payrolls for October and November was revised to show 8,000 fewer jobs created than previously reported but overall a solid report which reinforces the view that while other nations slow up, the US is making slow and steady progress.

So What does the Number Mean for the $Dollar?

Our view is a “normal time” this number would be bullish for risk currencies but not any more - its solid if unspectacular and with the Euro zone fiscal crisis still ongoing, there will be no big move to risk assets.

The Euro and risk currencies have gently sold off but we will today or Monday see some counter trend action, due to the oversold condition and in light of this, we have cut our dollar longs by 50%. If a rally does occur in the risk currencies – its a great opportunity to load up on dollar longs.

We remain firm dollar bulls and looking to buy the dips.

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