Labor Department data showed payrolls increased 162,000 last month, the smallest gain in four months and compared with a median forecast of 185,000. The unemployment rate dropped to 7.4 percent and was forecast to fall to 7.5 percent, according to the Bloomberg survey median. Reports yesterday showed factory output from the U.S. to China and Europe expanded in July. The Fed said July 31 it would maintain a monthly bond-buying program, without indicating when it may start to reduce purchases.

“The market will read today's jobs report as part of the mixed data that's shaping the Fed's policy,” said Stephen Wood, the New York-based chief market strategist who helps oversee about $237 billion at Russell Investments. “The pattern of economic growth looks more lumpy coming into this quarter.”

Eoin Treacy's view Sentiment seems to ebb and flow on a daily basis around the question of whether the Fed will taper its quantitative easing later in the year. What seems clear is that the US economy is improving, albeit at a slower pace than that of previous recoveries. Considering the fact that Treasuries represent the market where the Fed has exerted the most direct influence it is likely to be the most important arbiter of the Fed's actions.

US-10 year Treasury yields pulled back from the upper side of their short-term range today. This suggests that the ranging phase which has been in evidence since late June is likely to continue. So far this has the characteristics of a relatively gradual process of consolidation following the earlier surge in yields. A sustained move below the 200-day MA would be required to question medium-term supply dominance.

Gold reversed an earlier decline to close above $1300. A sustained move below $1280 would now be required to question current scope for additional higher to lateral ranging.