FX Update

Major Markets

Friday's US trading day dawned with the release of October's nonfarm payrolls data and the unemployment rate. Market expectations were centered on a job loss number of 175,000-many economists and market commentators were even predicting fewer losses-but the print came in at 190,000 losses for October. Upward revisions to August and September's number helped to offset October's disappointment, but the real shock came from October's unemployment rate: The unemployment rate soared to 10.2% after a rate of 9.8% in September and expectations for a modest rise to 9.9% in October; the rate was the highest since 1983. After a close look, it is worth noting that the "under-employment" rate-a number that includes part-time employees who'd prefer a full-time position and others who'd like to be working but have given up looking-rose to a record 17.5%, up from 17% in September. This rise dashed market hopes for a quicker job recovery and US stocks opened lower by almost one percent, but have since recouped that loss and are essentially flat as we write.

Employment data releases up in Canada also disappointed as 43,200 job losses were reported for October, against consensus for a 10,000 job gain. Their unemployment rate also rose to 8.6% from 8.4%, and by more than expectations of 8.5%. Upon looking deeper into the numbers, the headline drop was almost completely due to losses of part-time jobs as the number of full-time jobs actually rose by 16,500. It's still not a pretty picture but does indicate that Canadian firms seem to be getting a little more confident by shedding part-time positions in favor of full-time positions.

Elsewhere, German factory orders rose by 0.9% in September, keeping the euro supported, and Norwegian manufacturing production was stronger than expected. In Australia, the RBA upwardly revised its 2009 and 2010 growth forecasts, citing increasing demand for Australian resources in China, rapid population growth and rising capital. The RBA more than tripled its forecast for GDP growth in 2009 to 1.75% and raised its 2010 estimate to 3.25% from a previous estimate of 2.25%.

Gold reached a new all-time high of $1,100, before coming back to $1,092 currently, and crude oil is trading at $77.30 per barrel. US Treasury yields are lower with the 10-year at 3.49% and the 2-year at 0.84%. Global stocks were mixed with Asian stocks up between 1-2% and European stocks closing essentially flat on the day. Enjoy the weekend!

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