• US nonfarm payrolls fall 345,000 (far less than expected); unemployment rates rises to 9.4%, jobless rate at 27-year high
  • Canada reports a loss of 42,000 jobs; unemployment rate 8.4%, highest in 11-years
  • UK’s Brown shuffles cabinet; Darling and Madelson stay on
  • Fed’s Lockhart: Fed should not wait too long to tighten, not there yet- Market News International
  • US VP Biden: Obama to announced “ramped up” stimulus on Monday
  • NY Fed’s Dudley: Fed could end bond buys if yield rise on economic optimism
  • US Consumer credit falls again in April, -$15.7 bln; March down $16.6 bln
  • Short end of US yield curve soars after employment report; 2-yr not jumps 36 bp to 1.31%
  • Stocks mixed, commodities reverse gains; Oil down to $68.40 from $70.30 intraday

Nonfarm payrolls were much less dire than expected, initially setting off a scramble to add to all aspects of the reflation trade. Ten minutes after the figures were released, Reuters picked up a story that had run a few minutes before the data on the Market News International wire. The headline “Lockhart says Fed should not wait too long to tighten monetary policy” caught the market at a weak point.

EUR, GBP, AUD all began to weaken dramatically and soon prices were tumbling. Technicals took over from fundamentals and macro players began to unload all aspects of the relation trade.

The unwind continued through out the afternoon, aided by hawkish comments from NY Fed president Dudley who said that the yield back up could prompt the Fed to quit buying treasuries if it is rooted in economic optimism and not just fear of excessive deficits.

US yields rocketed higher, especially in the shorter maturities. This made USD/JPY an attractive buy and sent prices up to 98.88 late in the US session, the highest in about a month.

EUR/USD fell from 1.4265 to 1.3935 triggering untold numbers of trailing stop-loss sell orders on the way lower. Same in Cable, with a fall to 1.5943 from 1.6240 after the data.

Commodity currencies rolled over and died. AUD fell to 0.7914 from 0.8122. Same story in CAD, with a kicker from the poor Canadian employment report. USD/CAD ramped to 1.1200 from 1.0960.