Traders have set their alarm clocks a little later this morning, with most asset classes set to snore loudly until 8:30 am when the July non-farm payrolls report is released. Equity indices are flat on their backs, the commodities complex is sleeping in the fetal position, Treasury yields and the dollar are nestled under the covers, and most major currency pairs are spooning comfortably.

This morning’s jobs number could be vital in setting near-term market direction. Investors expect the July non-farm payrolls report to function a little like Goldilocks’ porridge: If it is too hot, with more than 300,000 jobs created, the Fed will feel emboldened in continuing to raise rates at an aggressive pace. Yields will rise, and risk-sensitive assets will fall. If it is too cold, with the print coming in under the 100,000 mark, yields will drop and asset prices will climb as markets prepare for a recession and slower monetary tightening. And if it’s just right – somewhere around the 250,000 consensus number – current assumptions will prevail, with the economy expected to weaken gradually and the Fed seen reducing the pace of interest rate increases beyond September.

Canada’s job engine probably stuttered back to life in July. The latest Labour Force Survey, also out at 8:30 am, is expected to show 20,000 jobs created last month, with the unemployment rate ticking up to 5 percent. This is unlikely to have a material impact on monetary policy expectations – small shifts in one of the tightest labour markets in generations won’t persuade the Bank of Canada to adjust direction: investors expect a 50 basis-point move in September after last month’s jumbo-sized hike. Barring a report deeply in negative territory, any Canadian dollar implications will almost certainly be overshadowed by movements in the greenback.

The pound is inching higher after yesterday’s brutal dose of honesty from the Bank of England. The central bank raised rates by the most in more than two decades, while warning that inflation could continue to rise even as the economy falls into a sustained recession. A jump in front-end rates is helping to sustain the exchange rate, even as the yield curve inverts further out.

Oil prices look set to a record another punishing weekly loss. Barrels of West Texas Intermediate are going for less than $89, down 10 percent this week, and Brent is trading under the $94 mark, down almost 15 percent after Libyan production began to come online and US gas inventories climbed, defying typical seasonal patterns. Oil and gasoline prices are flirting with pre-Ukraine invasion levels, reducing pressure on Japan’s current account and removing one of the major forces compelling monetary tightening from the Federal Reserve. If sustained, some of this year’s biggest currency market dislocations could go into reverse.