U.S. equity futures are expected to open higher this morning as traders return from a long holiday weekend. Stocks are called higher based on stronger markets in Asia and Europe. Hawkish comments from the Reserve Bank of Australia are also helping to underpin the market.

The main focus this week will be U.S. economic reports. Recent reports have shown a slow-down in the economy. Earnings season is coming up which means traders could get jittery about economic growth and the outlook for corporate earnings.

Here's a recap of last week's trading action.

September Treasury Bonds posted a loss on Friday, most likely tied to profit-taking ahead of the long holiday week-end and the lack of selling pressure on the equities. Friday's action appears to be just a temporary slow-down in the trend. The weakening economy is likely to continue to underpin the Treasuries.

August Gold weakened this week driven lower by the possibility that a slow-down in the global economy will lead to deflation. Pressure could continue on gold next week if traders continue to unwind the Long Gold/Short Euro spread. The charts indicate there is room for another $60 break to the downside.

U.S. stocks rallied initially after the release of the U.S. jobs report but this may have been because traders priced in a worse than expected private-sector hiring figure. Nonetheless, the private-sector number missed the consensus so this short-fall is likely to lead to selling pressure at some point during the trading session.

Traders still look a little confused as to what to do with the jobs data. Short-term traders seem to want to rally the market because of technically oversold conditions. Longer-term traders are looking at the bigger picture which leans toward a weaker U.S. jobs outlook for the upcoming months.

Expect volatility today because of the expected clash between short-term traders and long-term investors. Don't be surprised by a strong short-covering rally because of oversold conditions and position liquidation ahead of the three-day holiday.

Like equity traders, September Treasury Bond and Treasury Note traders seem to be searching for something concrete from the jobs report to base their trading decisions. The first reaction was to rally Treasuries following the release of the bad jobs data, but there hasn't been much of a follow-through to the upside following the initial surge. This muted reaction could be because investors may have already priced in the bad number.

The U.S. Dollar finished mixed after disappointing jobs data from the private sector reignited thoughts that its economy was headed toward a double-dip recession.

Friday bearish employment report capped a bad week for the Greenback as it came on the heels of a rise in weekly U.S. Initial Jobless Claims on Thursday along with a fall in home sales and a weak reading of a key manufacturing index.

This week's negative reaction to the Dollar was in contrast to the recent trading pattern which showed a tendency toward flight to safety buying by investors following weaker U.S. economic news. Traders in the past had treated bad U.S. economic news as a bump in the road to recovery but the recent string of bad news has led investors to believe that a weaker trend is developing in the economy.

Coming into Friday's trading session; investors were looking for total jobless claims to fall 130,000. The actual number was -125,000. More important to investors however was the number of private-sector jobs created. Pre-report estimates were for an increase of 115,000 jobs in the private-sector. The actual hiring by the private sector was 83,000 jobs. This number was disappointing to traders. This report suggested that the pace of hiring was slowing, giving more evidence to speculators who believe the recovery has stalled and that the economy is heading south once again.

By contrast, the economic woes in the Euro Zone seemed to have settled down. Given time to allow the European Central Bank and International Monetary Fund financial aid to trickle down into the economy, traders now seem to believe that perhaps the September Euro is undervalued.

What this week's rise in the Euro against the Dollar is indicating is that perhaps the austerity measures enacted in the Euro Zone will provide for a much faster recovery while the "spend now, pay later" plan of the United States is failing to yield any concrete results.

Technically, the Euro formed a secondary higher bottom at 1.2151, providing the base for a huge breakout rally to the upside. The subsequent rally following a test of this low accelerated to the upside once tops at 1.2397 and 1.2467 were taken out on Thursday. Further upside movement was triggered by a break out above two down trending Gann angles which had held back all advances since April.

Although some bears still believe it is the weak U.S. economy rather than a strong Euro Zone economy that is driving this market higher, weak shorts have nonetheless been forced to cover positions. The real indication as to whether this week's rally was fresh buying or short-covering will be known once the Commodity Futures Trading Commission releases its weekly Commitment of Traders Report. If net shorts drop and net longs rise, then investors will treat this as a sign that the tide may be turning.

Given the current upside momentum, it appears the Euro has enough buying power behind it to drive higher to the next major retracement cluster at 1.2782 over the near term.

Looking at both the September British Pound and the September Euro it appears that countries making the hard decision to cut spending and invoke austere financial measures are the investor favorites at this time. The commodity-linked Canadian Dollar, Australian Dollar and New Zealand Dollar could be the currencies looking at downside pressure should demand for higher risk equities and currencies continue.

The daily chart for the British Pound looks very impressive. The weekly chart however holds the key to the long-term trend in the Sterling. While the main trend is up on the daily chart, the weekly chart still has resistance in the form of a main top at 1.5523. A breakout over this level will turn the main trend to up on the weekly chart. The first objective of this current rally is 1.5635 which represents a 50% retracement of the break from the April top at 1.7042 to the May bottom at 1.4229.

The September Australian Dollar broke sharply most of the week as demand for commodities and equities plunged. Currently the Aussie is trying to establish a higher bottom at a retracement zone at .8469 to .8378 but this area is not likely to hold if U.S. equity markets can't rally out of the hole they've dug.

News that China's economy may be slowing down is helping to put additional pressure on the Australian Dollar. If China's economy weakens further then expect it to take the Australian economy with it.

The next two week's will be critical to the U.S. Dollar now that the key economic reports are out of the way until stock market earning's season begins around July 15th. Investors will still be mulling over the U.S. data but will also be watching to see the results of the European bank stress tests. Speculation about the results of these tests could drive up volatility in the Euro.