Another important day for the United States as important fundamentals will be released today from the labor and services sectors, meanwhile, the Federal Open Market Committee will announce later today its rate decision, though markets will be rather focused on the FOMC’s statement since the rate decision is almost certain to come for unchanged rates.

The ADP employment report will be released for the month of October, whereas expectations signal that private employers shed 190,000 jobs in October following the prior reported 254,000 lost jobs back in September, as the labor market continues to bleed more and more amid the ongoing economic weakness.

The labor market remains on the receiving end of this crisis, as unemployment continued to rise over the past few months to reach a 26-year high at 9.8% in September, whereas expectations signal that unemployment will exceed 10% before this year ends, however, the pace of layoffs has been easing recently, and that could prove to be vital for the recovery over the course of 2010.

Rising unemployment alongside tightened credit conditions represent the major threat right now for the economy, as recently conditions started to improve in several sectors, yet with rising unemployment we should expect income growth to drop, and accordingly consumer spending; the corner stone for economic growth in the United States will be affected negatively.

Moreover, the Institute for Supply Management will released its services index for the month of October; the ISM services index is expected to have risen to 51.5 from the prior reported estimate of 50.9, as the services sector also seems to be on its way to recover from the worst recession since the early 1930s.

The services sector has been under huge pressure from the worst financial crisis since the Great Depression, however, as conditions started to improve recently, activity in the services sector also started to increase, yet there’s still a long way to go before the sector can regain stability, as the outlook for the U.S. economy remains rather uncertain over the upcoming period amid rising unemployment rates.

Finally, the Federal Open Market Committee will probably announce today that their benchmark interest rates were unchanged at a record low at the current target range between 0% and 0.25%, however markets will be more interested to hear what the Feds’ have to say over the outlook, especially as the Feds decided to end the Treasury purchases program in October, and now they plan to end the MBS, Agency Debt purchases program in March 2010.

The Feds will need to monitor the situation carefully, as now they need to assess the effects of the quantitative easing policy and see whether long term interest rates will start to rise or not, as if interest rates on mortgages and other long term interest rates start to rise, it means that the Feds risk another deterioration in credit markets, though conditions have improved noticeably over the past period, but still the outlook is still challenging.

Meanwhile, the Feds still have another concern though it has yet to materialize, and that is of course upside risks to inflation over the medium to long terms, as the hefty increase in money supply amid the huge amounts of liquidity that were pumped into the financial system will surely increase risks to inflation, yet since the economy is still weak at the moment, inflation risks are still under control over the short term, but adding rising energy prices to the equation, we can’t really be sure over the outlook for inflation.

The Feds will continue with their Dovish stance over the upcoming period, as it’s still way too soon to shift the monetary policy into a Hawkish one, however, and the Feds still need to make sure that the economy is back on the right track and can fulfill its long term growth potentials, but once that happens, we should expect a quick shift in policy, and we might even see an aggressive tightening policy taking place in order to battle upside risks to inflation…