• Non-farm payrolls fall 54,000; unemployment rate edges up to 5.6%; private sector adds 67,000 jobs; large upward revisions to prior months. Better than expected
• Japan’s Ozawa: Japan can use strong Yen to make overseas resource investments
• ISM non-manufacturing PMI falls to 51.5 in August from 54.3 in July
• Fed’s Lockhart: No appetite at Fed to monetize debt
• S&P 500 rises 1.3%, closes at 1105
• US 10-year note yield rises to 2.71%, up 8.5 bp from Thursday.

Much less dire than feared US employment figures set off a scramble to cover shorts in “risky” assets and to dump safe-havens. USD/JPY soared from 84.40 to 85.23 in a matter of minutes. The gains did not last particularly long as reports immediately began to circulate that a US hedge fund was a seller of upwards of $750 mln through a US bank in London. Once that talk made the rounds, intraday specs were quick to book profits.

Much weaker than expected ISM service-sector data pulled the rug out from under USD/JPY and sent prices down even lower than where they sat ahead of the employment report. We fell as low as 84.23 before stabilizing. The rest of the session saw tight range trading below the 84.50 level despite a solid rise in US yields.

AUD/USD was a clear winner today, rising on the employment report and holding gains even though the ISM data was very disappointing. A 0.9150 barrier was taken out along the way as we rallied as high as 0.9175 and end the day in the high 0.9160s. A gap was opened up on the intraday charts from 0.9110 through 0.9138. That will give traders something to shoot for Monday morning in Asia.

USD/CAD was the other big winner. Ozawa’s comments on Japan buying resources helped fuel the CAD rally as some dealers expect a Japanese company could jump into the bidding for Potash Corp. We slid to the 1.0390 area from 1.0545 ahead of the numbers.

EUR/USD was a bit of laggard, rising proportionately a bit less early on than some of the other currencies as soaring US rates gave prompted some modest dollar strengthen but, at the end of the day, we managed to add to the post-data highs around 1.2875. We rose close to a 1.2900 barrier, reaching 1.2898 on EBS. The EUR/USD charts have taken on a bullish bias after triggering an inverse head and shoulders pattern.

As risk aversion eased, so did the franc. We end the day at 1.3110 in EUR/CHF from 1.3050. Highs were at 1.3164.

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