• US nonfarm payrolls rise 120,000; large upward revisions to September and October data; unemployment rate falls to 8.6% as workforce falls
  • Talk IMF to receive EUR 200 bln in bilateral loans from European central banks to use for European bailouts
  • Rumors swirled late morning that Spain would be downgraded; immediate downgrade denied by Fitch
  • Senate Republicans oppose increasing IMF resources for European bailouts
  • IMF says will need more resources if European crisis worsens
  • ECB’s Stark: Downside risks have intensified, economic outlook has worsened; politicians may have to resort to two-speed integration in Europe
  • Austrian Chancellor: Real danger euro could break up unless measures are taken
  • S&P 500 flat at 1245
  • US 10-year note yield fa;;s 5 bp to 2.03%; Italian 10-year yield unch at 6.75%, Spain -10 bp to 5.68%
  • WTI +$0.86 to $101.05; gold rises $1 to $1745

EUR/USD headed into the US data on a firm footing after talk of European central banks putting together a package of loans to the IMF which would then be turned around and lent to highly indebted European countries. Also helping spur the pop to the 1.3530s was a rumor that US non-farm payrolls would rise 200,000 (with revisions, they pretty much did)…

We rallied from about 1.3510 to 1.35505, just far enough to trigger a barrier, before beginning to pullback. One catalyst for a stronger dollar across the board was the idea that the modest improvement in the US employment picture of late will prompt the Fed to keep its monetary powder dry at the upcoming FOMC meeting this month. Many had anticipated a third round of bond-buying to stave-off the impacts of slower global growth.

EUR/USD decoupled from equities for a time as stocks rose sharply after the open on Wall Street but they soon began to lose steam. EUR/USD losses accelerated with stops being triggered below the 1.3460 level and again below 1.3415/20.

We slumped as low as 1.3363 amid talk of a Spanish downgrade, a rumor of another attack on an Iranian nuclear installation (unconfirmed) as well as an article highlighting heavy opposition for new IMF resources from Republican lawmakers in the US. We steadied and spent the rest of the session consolidating below the former zone of support at 1.3415.