The dollar took an initial nosedive as Non-farm payrolls was reported at 56k vs. an expectations of 120k. The previous month was revised higher from -35k to -8k, which stills means the overall number indicates that Katrina's impact lingers.

The manufacturing sector however showed an improvement with 12k jobs added, which marks the first positive reading since May of 2005. Further good news was seen in the earnings number with the average hourly earnings jumping 0.5% vs. 0.2%, which was the highest pace of growth this year.  Average weekly hours also improved marginally while the unemployment rate dipped from 5.1% to 5.0%. 

Overall, it seems that even despite the decidedly mixed results, dollar bulls have full control and are taking the data in stride.  It seems that the most important thing at this point is that the market is focusing on income growth, suggesting that the Fed has further leeway to raise rates.  However we are still caution that weak labor growth and the prospect of high heating bills still poses a risk for the US consumer, especially going into the usually critical Christmas shopping season.  In general, the mixed non-farm payrolls report leaves most of the problems unresolved which means that range trading should remain the predominant theme in the EUR/USD.

Boris Schlossberg is a Senior Currency Strategist at FXCM.