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Lately, the markets have been abuzz over today’s big FOMC statement, but just over the horizon looms another hard-hitter–the monthly U.S. non-farm payrolls (NFP) report!

This release is particularly interesting to see because we haven’t been getting the usual risk aversion/risk appetite reactions to NFP data in the past three months. Come to think of it, reactions have been pretty much one-sided to the dismay of dollar bulls.

A broad dollar selloff followed July’s worse-than-expected 131,000 decreases as it almost doubled analysts’ forecasts for a 63,000 decline in employment.

Even when the U.S. outperformed expectations in August and recorded a 54,000 drop – almost half the expected decline – the dollar was unable to gain ground.

As for the latest release, all we saw were wild swings in immediate response to September’s horrible drop of 95,000, way below the 1,000 uptick most were hoping to see.

Clearly, the employment situation hasn’t been picking up. The persistent monthly declines in employment have been bugging the U.S. like an itch it can’t ever seem to scratch… Or like the swarm of flies, that’s been following Cyclopip around. That’s your cue to shower, bro!

For October, the employment situation is expected to be slightly better than in the previous month. In fact, the non-farm payroll figure is projected to land back in the positive territory, printing a 65,000 increase in hiring.

That’s quite a leap, considering how the payroll figure has been stuck in the red for the past four months. Despite the estimated uptick in hiring, the unemployment rate is still expected to stay at 9.6%.

Supporting the forecast for October is the ADP non-farm employment change report, which is also expected to show an increase in private sector hiring for the month.

Private payrolls are slated to climb by roughly 21,000 after the 39,000 increase in joblessness in September.

Government hiring, on the other hand, is expected to post another decline in October as state and local governments had to lay off some of their workers to cope with tighter budgets.

As usual, we can probably expect some wild action in the markets after the release of the NFP report.

Employment is a key driver of consumer spending, so everybody pays attention to developments in this area. Unfortunately, recent income and spending growth figures haven’t exactly eased concerns about the job market. Both income and spending growth failed to hit their targets last month, as spending rose by just 0.2% while incomes actually fell by 0.1%.

As my buddy Pip Diddy pointed out in his roundup yesterday, one reason why incomes fell was that many people saw their unemployment benefits checks stop coming in.

If this week’s NFP report shows a worse-than-expected figure, it could signal future weakness in consumer spending. In turn, this might make traders even more bearish for the dollar.

Now, I know you’re probably thinking, “Will people really pay attention to the NFP? Won’t everybody be focusing on the FOMC report due later today?”

In this old man’s humble opinion, even if the Fed decides to just sit on its hands today or implements “QE lite” instead of “QE2,” traders will probably look at the upcoming NFP could as a determining factor of the Fed’s future moves.