Archived IMT (2010.12.03)

USD FALLING ON POOR US figures may appear to be an unusual dynamic in currencies considering the laws of risk aversion of the past 3 years. Nonetheless, these dynamics have changed after the Nov 4 announcement of QE2, when positive US data started to help USD on the rationale that improved economy reduces the likelihood of completing the entire $600 bln in asset purchases. The disappointing US November jobs report (+39K NFP vs. +145K consensus and +0.2 pt increase in unemployment rate to 9.8% vs. 9.6% consensus) adds to expectations of full QE2, thereby sending US 10 year yields back below 3% and weighing on the USD across the board. On the positive side, the Nov jobs report showed the first back-to-back monthly increase in jobs since April-May. EURUSD makes a vital rebound above $1.3350, lifting 3.2% off this weeks 3-month lows of $1.2980. Next weeks Irish budget may be among the remaining obstacles for EUR sentiment, followed by Spain auctions (Dec 14-16). In order for EURUSD to break off its 5-week downtrend, it must attain a close above $1.3420-30 next week, which coincides with the important 55-week MA as well as the lows of Nov 15-16 and the low from Sep 28. Subsequent technical barriers for the euro stand at $1.3660.