U.S. equity markets are trading flat in limited trading despite rallies in the Euro and British Pound. Earlier in the week, strength in both of these markets triggered rallies in stocks as traders demanded risky assets.

Earlier this morning, the European Central Bank and Bank of England policymakers voted to leave interest rates unchanged. Stocks failed to move on the news as it was already priced into the market. The press conference by ECB President Trichet could move the markets, if he announces an exit strategy now that it appears the Euro Zone economy is on the road to recovery.

Stocks firmed late Wednesday after trading in a tight range throughout the day following a good ADP employment report. Today another piece of the employment puzzle will be revealed in the form of weekly initial claims. Both of these reports are leading up to Friday's Non-Farm Payrolls Report. Early guesses are for this report to show a decline of 65,000 to 90,000 jobs. The Fed will also be watching this report closely as it will be a strong determinant in next week's monetary policy decision.

After an early reaction to the initial claims report, volume may dry up today ahead of tomorrow's big report, leading to a choppy, sideways trade.

Treasury futures are at a key juncture on the charts. Yesterday the September T-Notes made a new high for the year as yields plunged. The lower close, however, helped form a closing price reversal top which could lead to the start of a 2 to 3 day break.

September Treasury Bonds also had a reversal down, but the pattern suggests the possible formation of a bearish secondary lower top formation.

Although the Fed is expected to keep interest rates low and may implement another round of quantitative easing, sentiment has shifted toward risky assets, putting pressure on the lower yielding Treasuries.

December Gold is trading flat this morning, following a strong five day rally. The main trend is still down despite the rally with the market stopping short of taking out the recent main top at $1207.50. A move through this price will turn the main trend to up. If weakness develops today, then look for the start of a correction back to $1182.40 over the near-term. At this price level, traders will have to decide whether to form a secondary higher bottom or resume the downtrend.

On Thursday the Bank of England policymakers voted to leave its benchmark interest rate at the historically low 0.5%. This move was expected because BoE officials are still unsure what the effect the newly implemented austerity measures will have on the economy. Furthermore, there is still uncertainty over what effect the upcoming new taxes will have on economic growth. Some investors feel the central bank will have to remain flexible with its monetary policy in case the developing economic recovery stalls.

Lately the British Pound has been trending higher, reaching a major retracement zone. Most of this move has been driven by speculators looking for improvements in the U.K. economy while the U.S. economy falters. The recent Second Quarter GDP Report was better than expected; leading some investors to believe the economy is on the road to recovery. Skeptics cite the fact that this reading took place before the austerity measures were implemented.

High inflation has also had investors worried. One of the challenges for the Bank of England will be controlling inflation without stifling growth. Uncertainty over how the BoE intends to do this may limit gains and could begin to put pressure on the Sterling.

Technically, the British Pound found resistance at a key .618 retracement level earlier this week at 1.5967. Holding this level could trigger the start of a break back to 1.5635. Overnight the Sterling traded below 1.5884, putting this currency lower for the week. The market bottomed early in the trading session and put in a short-term top shortly after the central bank announcement.

Although the Pound is trading higher shortly before the New York opening, gains could be limited as traders stand aside ahead of tomorrow's U.S. Non-Farm Payrolls Report. This report will offer more insight into the state of the economy and influence the Fed's monetary policy decision at next week's FOMC meeting. There is speculation that the Fed will renew its quantitative easing program. This along with low interest rates could keep downside pressure on the Dollar.