- US nonfarm payrolls fall 663,000, unemployment rate rises to 25 year high at 8.5%
- Non-manufacturing ISM falls to 40.8 from 41.6, weaker than expected
- Fed’s Kohn: Fed commitments could add “a couple trillion” to Fed balance sheet
- Bernanke: Fed must retain flexibility to withdraw liquidity to avoid inflation
- EU launches excessive deficit procedure against France, Ireland, Greece and Spain.
- EU finance ministers ask for mark-to-market flexibility like that granted by FASB
- Copper rises 5.8%, breaks $2, oil recoups early losses, closes at $52.35
- Gold closes at 891.50; IMF sales, receding risk aversion weigh
- US 10-year note yields rise 12 bp to 2.90
- S&P 500 up 1%
It was a choppy session in New York with the market initially buying risky assets in the wake of the US employment report. Despite a horrible 663,000 drop in non-farm payrolls, the jobs report was not as bad as feared. EUR/JPY rallied to 135.01, triggering a barrier but it soon tumbled on profit-taking, slipping to 133.50. Prices recouped lost ground for the balance of the session and eventually set off a fresh wave of buying late in the session as it became clear that the reflation trade had only suffered a flesh wound and not something more severe. A big rise in copper prices helped.
EUR/JPY sprinted to 135.25 and closed on its highs while GBP/JPY ended at 148.65/70, the highest level since November. AUD was a relative laggard given the backdrop,consolidating gains on the 0.71 handle after recovering from a brief dip to 0.7055.
USD/JPY ended near its highs as well, closing at 100.30. 100.55 is important resistance above the market.
EUR/USD surged to 1.3495 after the US employment report before turning south with EUR/JPY. It fell to 1.3365 before rebounding to 1.3490 late in the day.
Have a great weekend, all!
