EURUSD experienced wild swings after the US non-farm payroll report, initially jumping to 1.3201 from 1.3167 but soon fell back down to 1.3111 as the dollar strengthened. The US created an additional 243,000 jobs beating expectations of 150,000, which was lower than December’s 200,000.
Prior to the US jobs data, EURUSD had been rising steadily from the session open of 1.3142 to 1.3185, lifted by optimistic eurozone PMI data that signalled the region was in a recovery phase. Then the first knee-jerk reaction to the US jobs data was a boost in risk sentiment, which helped lift risk currencies like the euro, but then dollar turned firmer as the news signalled a stronger economy. This erased concerns that the US Federal Reserve would have to introduce more stimulus. More quantitative easing would have a weakening effect on the dollar.
GBPUSD opened in Europe at 1.5825 and climbed to a session high of 1.5860 due to an unexpected rise in the UK Services PMI in January, to the highest level since March 2011. This data adds to the positive manufacturing PMI data from Wednesday and shows that the UK economy could avoid a recession. Cable briefly rose after US Non-farm payrolls to 1.5835 from 1.5812 but then dropped to 1.5754 as the dollar gained strength.
The dollar extended gains against the yen, USDJPY hitting 76.48 within a minute from 76.22, then extending higher to 76.63. This eased concerns of a Bank of Japan intervention as the dollar has moved well off three-month lows . The BOJ intervened in October last year to cap yen strength.
The Canadian dollar weakened sharply against its US counterpart in reaction to weak Canadian jobs data. Statistics Canada reported that in January a mere 2,300 new jobs were added in Canada, much fewer than the forecast 23,100 as analysts were expecting an increase from December’s 17,500 jobs. USDCAD surged after the news from where it was at 0.9998 to 1.0022 within a minute. However after the US jobs report, the Canadian dollar regained losses, pushing USDCAD back down to 0.9979
With the US jobs report temporarily taking the spotlight away for the European debt crisis, the focus reverts back to it, as investors grow concerned over the lack of progress in resolving the Greek debt situation.