U.S. DOLLAR: WILL THE G20 MEETING SPARK FIREWORKS?

The better than expected non-farm payrolls report lived up to its reputation of triggering sharp volatility in the foreign exchange market. The U.S. dollar initially sold when traders saw the sharp increase in the unemployment rate but then recovered aggressively when everyone realized that the smaller drop in payrolls made the overall report more positive than negative. When the U.S. equity market opened an hour later, dollar strength began to fade as risk appetite took over. When the dust settled, the improvement in the NFP report proved to be more risk positive than dollar positive and eventually drove the AUD/USD above 85 cents to a new yearly high.