Morning Currency Wrap for Friday January 7, 2011

Buy The Rumor Sell The Fact  - The build up in expectations in today's U.S. jobs report after Wednesday's better than expected ADP report has been ridicules. I saw some estimates revised up to over 500K new jobs from the low 100K - so the report was bound to disappoint. USD bulls out there get ready to buy into the sell-off today has the overall trend remains USD friendly especially with the refinancing hump facing the euro zone this spring, after that the trend should change. The USD pared its advance against the Euro after the U.S. payrolls report showed employers added fewer jobs last month than economists forecast. Non-farm payrolls increased 103,000, the Labor Department said on Friday, below economists' expectations for 175,000. However, overall employment for October and November was revised to show 70,000 more job gains than previously reported. The unemployment rate fell to 9.4%, the lowest since May 2009, from 9.8% in November. Next up will be Fed Chairman Ben Bernanke who speaks on the economic outlook before the Senate Budget Committee at 9:30 a.m. I'm sure that he will continue to say that he is focused on unemployment and that he fully expects to complete the QE2 bond-buying plan. Meanwhile, as I posted yesterday here, the Euro continues to be hampered by EU insistence on spreading the cost of bank failures. In Asia, the AUD continues to drift lower on concerns about how devastating floods in Queensland and other parts of Australia could affect the economy and its exports of key commodities. In Canada, the CAD moved higher after Canada's economy created more jobs than expected in December after three months of disappointing employment numbers. Employment rose by 22K, better than expected 17K, mainly because of a surge in manufacturing jobs. The unemployment rate held steady at 7.6%. This report allowed Canada to be the first Group of Seven country to recoup all the jobs lost during a global recession and credit crisis. This will probably not be enough to persuade the Bank of Canada to hike interest rates this month, but  it could mean its next hike will come sooner than previously expected.