• Merkel: Hardly any G20 countries have said they will participate in EFSF; no agreement on additional resources for IMF
  • Italy “asks” IMF to monitor budget reform commitments
  • EU’s Van Rompuy: Italy not in same situation as Greece
  • US non-farm payrolls rise 80,000; unemployment rate edges down to 9.0%; payrolls of prior two months revised up 102,000 combined
  • Berlusconi: IMF offered aid, Italy declined; Italy not giving up sovereignty to IMF
  • IMF: Italy was not offered financing; Mission will be on ground by the end of the month
  • Cit: Good chance BOE adds to QE next week
  • Canada’s Ivey PMI: 54.4 in OCtober versus 55.2 forecast
  • IMF will not lend to EFSF, only to sovereign states
  • Papandreou expected to resign in favor of a unity government if survives confidence vote
  • Cyrpus (euro zone member) downgraded to Baa3 from Baa1 by Moody’s
  • G20 communique vows more currency flexibility
  • S&P 500 falls 0.6% to 1253
  • US 10-year note falls 4 bp in yield to 2.04%
  • WTI rises $0.30 to $94.37; gold falls $9 to $1767

The lack of a “ring-fence” for Italy and Spain from the G20 meeting and Merkel’s comment that there was little appetite from G20 members to invest in the EFSF sent EUR/USD lower in its range in early US trade despite a mixed US employment report which, when including revisions to the prior-months’ data was slightly better than expected. Not a game changer, but not horrible, either.

EUR/USD fell as low as 1.3710 from highs of 1.3870 early in US trade and ends the day at 1.3780. The market awaits the end of the long-running drama starring Greek heartthrob George Papandreou at some point this evening. Who will take his place remains an open question at this hour.

The opposition wants their man Samaras at the helm while Pasok wants the sitting finance minister Venizelos to take over. Either way, the latest bailout package will be passed by the unity government, which is all the market cares about in the very short-term.

Markets ended the session off their lows, spurred by hopes a unity government will take Greece out of the headlines for a while. If Greece or Italy remains the top story come Monday, look for EUR/USD to endge lower in the 1.3660/1.3870 range.