• US non-farm payrolls rise 103,000; unemployment rate holds steady at 9.1% : July and August revisions add 99,000 jobs
  • Canadian employment rises 60,900; unemployment rate falls to 7.1% from 7.3%; much better than expected
  • Irish PM Kenny: Aims to be first country out of IMF protection
  • French official: No disagreement with Berlin on banks
  • IMF’s Borges: Not at all happy with Greek privatization efforts
  • US wholesale inventories rise 0.4% in August
  • Fed’s Fisher: If fiddling with the yield curve would help the economy, I would have supported it
  • Portugal to add tolls on roads that are now free
  • Fitch downgrades Italy to A+ from AA-; outlook still negative
  • Fitch downgrades Spain to AA- from AA+; outlook negative
  • Fitch says Portugal remains on review for a possible downgrade to junk territory; to be
  • resolved in Q4
  • EU sends support team to Portugal to help “refocus” Troika aid programs
  • Japanese economy minister Furuawa: Important for Germany and France to lead Europe through crisis; Crucial to stabilizing global growth
  • US consumer credit falls sharply in August, down $9.5 bln
  • S&P 500 falls 0.8% to 1155
  • US 10-year note yield rises 8 bp to 2.075%
  • WTI rises 0.30 to $82.88; gold falls $14 to $1637

The trend toward covering over-extended shorts in risk assets accelerated this morning after US employment data came in somewhat better than expected. Fears of an imminent slide by the US economy into recession have been receding all week and today’s data helped accelerate that process. Also helping risk-assets (EUR, AUD, CAD. commodities, stocks…) were further signs that Europe is preparing to get serious on injecting fresh capital into the beleaguered banking system. EUR/USD reached 1.3525, touching a trendline in place since mid-September, before stalling.

Support was seen on dips to the 1.3450/60 area on dips initially but news that Spain and Italy had been downgraded by Fitch sent EUR/USD tumbling anew. We fell as low as 1.3359 before stabilizing. We close the day at 1.3385, a very disappointing level for those looking for a more sustained retracement in EUR/USD.

CAD was a standout performer early today, rallying sharply versus the dollar after very strong Canadian employment data. Better risk appetites in general helped as well until the European downgrades spoiled the party. USD/CAD traded down from just above 1.04 ahead of the data to 1.0235 after the US employment report. From there it began its roundtrip to end essentially unchanged at 1.0390 on the day.

Cable continued its post-QE recovery today despite the downgrade of a dozen US banks. It reached 1.5620 as risk aversion trades were reversed. We end at 1.5555, just about a cent higher than we were before the BOE cranked up the printing presses at midday Thursday. She’s a cruel mistress, the pound.