02:52 PM
Small Losses: The dollar index raced to its best levels of the session in the moments following the better than expected nonfarm payrolls report, but has recently slipped into negative territory. EURUSD is +15 pips at 1.3160 as today’s session has seen action hit both the upper and lower ends of the recent trading range. A push through the 1.32 level is likely to start another round of short covering as euro bearishness remains strong. Greek debt swap talks will be ongoing over the weekend with Eurozone Sentix Investor Confidence and German Factory Orders scheduled for release on Monday. GBPUSD is +20 pips at 1.5820 as action attempts to consolidate neat 1.58. Traders are looking ahead to Thursday as the Bank of England is scheduled to opine, and may add to its asset purchase program. USDCHF is +20 pips at .9180 with trade holding near the pair’s 100-day moving average for a sixth consecutive session. The recent strength in the franc has been rather alarming to the Swiss National Bank which may soon see a test of its EURCHF 1.20 floor. Switzerland will release its foreign currency reserves early Monday morning.

USDJPY is +35 pips at 76.55 as today’s strength has Japanese authorities breathing a small sigh of relief. Early buying ran the pair up to 76.74 before sellers appeared at resistance. Japanese Finance Minister Jun Azumi was out earlier reiterating his stance the yen was too strong, but so far the Bank of Japan/Ministry of Finance have not stepped into the market. AUDUSD is +80 pips at 1.0790 with today’s buying running the hard currency to its best levels since August 2. Aussie bulls now have their sights set on the all-time high near 1.11 as little resistance stands in its way. Australian Retail Sales and ANZ Job Advertisements are due out Sunday evening.



USDCAD is -55 pips at .9935 as today’s selling has dropped the pair below its 200-day moving average. The .9900 area now proves to be a critical support level with a breakdown likely resulting in a test of .9700l. Canada’s Ivey PMI will cross the wires late Monday morning.

01:37 PM
30-yr Slumps: Treasuries remain trapped on session lows as today’s steep slide has the 30-yr bond down three points at 99 10/32. The heavy selling has the 30-yr yield up 16 bps at 3.162% and on pace for its highest close since October 31. Slight steepening of the knob of the curve has the 10-30-yr spread wider at 121.5 bps. Meanwhile, precious metals remain weak with gold down $19 at $1740 and silver off $0.45 near $33.75.   

12:55 PM
Afternoon Update: 2-yr unch @ 100 00/32...3-yr -02/32 @ 99 24/32...5-yr -10/32 @ 100 14/32...7-yr -21/32 @ 99 11/32...10-yr -1 01/32 @ 100 16/32...30-yr -2 26/32 @ 99 15/32...EURUSD unch @ 1.3140...GBPUSD +15 pips @ 1.5815...USDJPY +35 pips @ 76.55...USDCHF +25 pips @ .9185...AUDUSD +75 pips @ 1.0785...USDCAD -60 pips @ .9930

11:46 AM
On Lows: Treasuries remain near session lows as equity markets hold strong gains following today’s better than expected jobs report. Despite its 11 bp surge to 1.941%, the 10-yr yield is at its highest level in just more than a week. Traders will be watching the 2.10% level as a push through there would be a victory for Treasury bears. A significantly steeper yield curve has the 2-10-yr spread wider at 170.5 bps. Meanwhile, precious metals remain under pressure with gold down $16 at $1743 and silver off $0.35 near $33.80.

10:56 AM
Greek Talks Linger: The Dollar Index spiked off the 78.75 support level and jumped above 79 as a stronger than expected jobs number drove the dollar higher. Consensus from economists were looking for a number of 155K, but January results blew that away. Importantly, the December and November numbers were both revised higher. Bears have been poking holes in the number by looking at long term unemployment, birth/death rate, and figures showing people leaving the workforce. But the key item is that the Fed has stated employment remains its primary focus right now, and thus a better than expected number suggests a downgrade in the chance of a QE 3. And this is a positive for the greenback. Currently 79.30 is providing resisitance for the intra-day rally.

The euro was sold on the news, and fell to 1.3070 before seeing support. Also weighing on the single currency were reports that Greece's technocratic leader Lucas Papademos may step down if the country cannot decide on austerity measures. Mr. Papademos is set to meet with the three parties in the country on Saturday with hopes that they can reach an agreement on austerity measures laid out by the Troika. The PSI talks have garnered the most attention, but the general belief is that these have been agreed to but variables from the austerity measures are making it difficult to come up with exact numbers to push Greece down to the 120% debt to GDP target. The market will closely watch this unroll over the weekend, but will also start to prepare for next week's ECB meeting. Comments will be key as the central bank will roll out its second 3-year LTRO program at the end of the month.

The pound jumped to the 1.5860 level following a better than expected Services PMI number. Survey data from the region has been strong and is casting some doubt that the country will expand its asset purchase program at the moment. Currently there are rumors that the U.K. will expand its program by GBP50 bln at next Thursday's BoE meeting.

The yen saw some weakness this morning as it tumbled back to 76.70 against the dollar. The government began its verbal intervention assault yesterday as the strong yen continues to cripple exporters. Panasonic is the latest victim as it announced it would lose $10 bln this year compared to prior projections of approximately $6 bln. However, this looks more like a dollar strength than a yen weakness story.

10:10 AM
Data Reaction II: Treasuries are seeing further selling pressure after the ISM Services beat and the factory orders miss. Heavy selling of the long bond has it lower by 2 21/32 which in turn has run its yield up to 3.15%. A loss of one point has the 10-yr yield testing the 1.95% level. Elsewhere, the 5-yr yield is up 7 bps at 0.776% after hitting a record low 0.696% earlier this morning. The yield curve has swung significantly steeper on today’s selling with the 2-10-yr spread wider at 170 bps. Meanwhile, precious metals are under pressure with gold down $20 at $1739 and silver off $0.55 near $32.60.

09:04 AM
European Yields: European yields are higher across the board as Greek PSI talks drag on. Reports suggest newly appointed Greek Prime Minister Lucas Papademos may resign if the coalition government cannot agree on reforms. A meeting between EU finance ministers previously scheduled for Monday has been canceled which suggests a Greek PSI deal will not get done over the weekend. Italy and Spain are seeing yields climb as much as 12 bps with their 10-yr yields now at 5.63% and 4.73% respectively. Elsewhere, modest selling of UK Gilts has yields along the curve higher by as much as 5 bps as the 10-yr sits at 2.15%. German Bunds and French OATs are seeing light selling pressure with their 10-yr yields at 1.89% and 2.92% respectively.

08:38 AM
Data Reaction: Treasuries are under severe pressure following the strong nonfarm payrolls number. The long bond has plunged more than two points to 100 08/32 with its yield now up 7 bps at 3.074%. A 9 bp spike in the 10-yr yield has run it up to 1.92% and to its highest level since January 27. Significant steepening of the yield curve has the 2-10-yr spread wider at 169.5 bps. Meanwhile, precious metals are little changed with gold at $1757 and silver near $34.15. Factory orders and ISM Services will be released later at 10 am ET.

07:33 AM
Little Changed: The dollar index is little changed but lower as action slows ahead of the nonfarm payrolls report. The index slipped to an overnight low near 78.80 before paring its gains and climbing back above 78.90. EURUSD is +15 pips at 1.3160 despite the Eurozone retail sales miss (-0.4% MoM expected v. 0.4% MoM expected). Action remains stuck between 1.3050 on the downside and 1.3200 on the upside as bulls and bears continue to battle near key resistance. GBPUSD is +25 pips at 1.5825 as sterling looks for its eleventh day of gains in the past 14 sessions. Today’s gains come after Britain’s Services PMI topped expectations with a 56.0 print (53.5 expected, 54.0 previous). USDCHF is flat at .9155 as trade continues to hold near the pair’s 100-day moving average. Yesterday’s comments by Swiss National Bank Interim Chairman Thomas Jordan has not impacted EURCHF which holds near 1.2045.



USDJPY is +5 pips at 76.25 after Japanese Finance Minister Jun Azumi reiterated his stance that firm action will be taken in an effort to weaken the yen. Currently, USDJPY holds just 70 pips above its October 31 record low. AUDUSD is -15 pips at 1.0695 after Australia’s AIG Services Index ticked up to 51.9 (49.0 expected). Traders continue to press the 1.0750 level with a breakout possibly sparking a test of the pair’s all-time highs near 1.11. USDCNY strengthened to 6.3012.

USDCAD is +30 pips at 1.0020 after closing below dollar parity for the first time since October 31. Today’s strength comes after Canada’s employment change rose 2.3K (23.3K expected) as its unemployment rate ticked up to 7.6%. Traders continue to support the .9975 level as the pair’s 200-day moving average lies in the vicinity.

07:03 AM
Waiting on Nonfarm Payrolls: Treasuries are little changed this morning as traders await this morning’s jobs report. Yields across the complex have spent the entire overnight session within 1 bp on either side of their respective flat lines with the 10-yr near 1.825%. The quiet session has had little impact on the yield curve as the 2-10-yr spread holds at 160 bps. Meanwhile, precious metals are mixed with gold up $1 at $1760 and silver off $0.15 near $34.00. Today’s data is the most anticipated of the week as nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, average workweek (8:30), factory orders, and ISM Services (10) are all released.