Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

ForexLive US wrap-up: European debt overshadows employment report

|Includes: FXE, GLD, SPY, UDN, PowerShares DB USD Bull ETF (UUP)
  • US nonfarm payrolls fall 20,000 in January; unemployment rate unexpected falls to 9.7%; Benchmark revision slices 930,000 jobs from 2009 total.
  • Canada adds 43,000 jobs in January
  • UK’s Darling: BOE quantitative ease halt “sensible”
  • Portugal passes regional finance law; Government defeated
  • Trichet denies emergency ECB meeting this weekend over Greece.
  • Spanish PM Zapatero vows EU will support Greece
  • Fed’s Hoenig: Timing of rate hikes will depend on economy
  • US consumer credit falls for 11th straight month but pace declines dramatically
  • European shares close down 2.5/3.5%
  • S&P reverses large loss intraday loss, ends modestly higher
  • US 10-year note ends 7 bp lower at 3.53%
  • Oil falls below $70 intraday, ends down $1.25 at $71.85
  • Gold falls to $1044.75before reversing to end near highs at $1067

No lack of volatility on an employment Friday. The unemployment report was met with head scratching as the US continued to shed jobs but at the same time saw a solid fall in the unemployment rate. After about 45 minutes, the market turned its attention back to Europe and the euro began to spiral lower.

We reached a high of 1.3742 shortly after the report but before long we were headed lower as risk aversion spiked as contagion spread throughout the markets. The selling reached a crescendo shortly before Europe closed up shop. Oil led that leg lower as it tumbled briefly below $70. EUR/USD slipped as low as 1.3585 on EBS.

We recovered late in the afternoon, helped by weekend short-covering as well as a much improved US consumer credit report. US consumer paid down $1.7 bln in debt in December after paying down nearly $22 bln in November. We end the day around 1.3660.

USD/JPY reached 89.89 after the employment report but slipped as risk aversion returned at mid-morning in New York. We made a final push to the 88.82 level at mid-afternoon but bounced sharply from there. That level contained a dip yesterday afternoon and protected the 88.55 spike low set Thursday. Some posit that the BOJ or Kampo may be parked at that level to keep the JPY from garnering any further safe-haven strength. EUR/JPY fell to a trend low at 120.70 and ends around 122.15.

Cable broke to fresh trend lows at 1.5560 this afternoon but recovered as stocks and commodities reversed late. It ends at 1.5635.

AUD jumped after the US employment report, nearly testing yesterday’s breakout. We reached 0.8617, just south of what had been key support at 0.8735. Prices were crushed as low as 0.8577 bouncing off the 200-day moving average there. It rebounded sharply to end at 0.8680.

Have a great weekend all. Get some rest after a very hectic week…

Disclosure: No positions