- US non-farm payrolls fall 85,000, unemployed rate steady at 10%
- Canada losses 2,600 jobs; rate steady at 8.5%; weaker than expected
- Brazil says will use sovereign wealth fund to maintain steady exchange rate
- US wholesale inventories rise 1.5% in November; biggest gain in 5 years; positive for GDP
- Greece: EU visit helped improve budget deficit plan
- Fed’s Lacker advocates asset sales as part of exit strategy; global demand helping exports; economic growth reasonable in 2010
- US consumer credit falls a record $17.5 bln; eight straight monthly decline
- US 2-year note falls from 1.08% yield before employment report to 0.97% at the close; 10-year not nearly unchanged on day
- S&P 500 edges up 0.3% to 15 month high despite poor payrolls to 1145
- Oil up $0.23 to 82.89; gold closes at $1136
EUR/USD fell ahead of US payrolls with the market betting the number would beat expectations and beat them badly. Turned out to be a bad bet. The market gapped higher as payrolls fell 85,000, overwhelming a mildly positive revision to the November data. EUR/USD reached 1.4415 in short-order on short-covering but heavy sales from an Asian regional central bank capped the market there.
The dollar soon began an across the board recovery, sending EUR/USD as low as 1.4300 as traders scrambled to reestablish long dollar positions. Once everyone was back on board, prices soon ramped up to 1.4439, stopping out a whole fresh crop of EUR/USD shorts. We end at 1.4415 with the market reluctant to crawl out from under the desk until Monday.
USD/JPY opened firm in the US, near 93.40 despite comments overnight from Kan backing off his weak yen comments. Sliding US yields after the US payrolls sent the buck skidding to 92.30, rallied to 93.25 as traders scrambled to reestablish longs, only to slump again at midday on New York. We end at 92.65.
Cable’s price action was brutal, spiking from 1.5965 to 1.6110 only to fall to fresh US lows at 1.5960 near the London fixing. We rebounded to 1.6040 late, but the pound trades weak on the crosses as the UK debt mountain spooks investors.
AUD spiked from 0.9140 at the data to 0.9232; slid to 0.9170 and then rallied to 0.9253 before settling around 0.9135/40 for much of a shell-shocked afternoon.
Traders will take the weekend to decide whether the poor US employment report was “noise” amid an improving employment trend or a sign that the recovery is stalling. For now, the perception is that the Fed can stay easy for an extended period, just like they have been promising.
