I hope you guys aren't all partied out from 4th of July celebrations, because we could be in for more fireworks with the June non-farm payrolls (NFP) report due later today!

At 12:30 pm GMT, the U.S. is set to publish its June employment figures. Most analysts see NFP posting gains of 92,000. But keep in mind that although this figure is a big improvement from May's highly disappointing job growth of just 69,000, it's still well below the number needed to sustain the U.S. recovery.

Remember, it wasn't so long ago that we had seen back-to-back-to-back months of NFP gains above 200,000. Since then, job growth has fallen for four straight months already, and market expectations have set the bar so low that you could practically trip over it!

Meanwhile, the unemployment rate is expected to hold steady at 8.2%. If you think that's not so bad, let me put things into perspective for you: the unemployment rate has stayed above 8.0% since February 2009. That's a total of 40 months, the longest period of over 8.0% joblessness since 1948!

If job forecasts for June are met, it'll cap off one of the weakest quarters of growth in over two years, providing further proof that the U.S. recovery is losing steam.

Early clues in other reports?

The ISM reports released prior to the NFP report may provide early clues as to the health of the labor market and the general condition of the economy.

Earlier this week, the ISM manufacturing PMI dipped below 50 for the first time in almost 3 years, signaling contraction in the industry. As factory activity is usually a leading indicator of overall economic momentum, this report seems ominous.

On the other hand, the ISM non-manufacturing PMI just came out yesterday, but it didn't bear good news either. The index slid from 53.7 to 52.1 for the month of June, falling short of forecasts that called for a reading of 53.1.

Will a slump in the manufacturing and non-manufacturing sectors drag down employment? Well, from the looks of recent jobless claims data, we're already seeing signs of labor market weakness!

Jobless claims have been creeping higher lately, staying above 380,000 for five out of the last six weeks now. This means that labor conditions are worsening, as more and more people are filing for unemployment benefits.

However, the ADP employment report printed a huge upside surprise by showing job growth of 176,000 instead of the measly 103,000 that many had predicted.

Potential impact on the dollar

Given all the hoopla for QE3, if the report comes in worse-than-expected, it would simply cast another solid argument for the Fed to launch additional quantitative easing measures. This in turn could lead to risk rallies in the markets at the expense of the dollar.

On the other hand, with expectations already set so low, it might not take much to please market players. If the NFP release presents us with an upside surprise, it could temper calls for more QE and lead to large gains for the dollar.