Overall: The dollar closed Friday much weaker against all of the other major currencies spurred by a better than expected NFP report this morning. Recent positive global economic news has given traders confidence that the worst of the recession may be over. Market sentiment is now dollar negative as traders move away from the greenback in favor of riskier, higher yielding assets. Equity markets moved much higher with the DOW gaining triple digits and the S&P adding 20 points. Stocks were boosted after Federal Reserve Chairman said a review of banks’ health, through the much awaited stress tests, “should provide considerable comfort “. It has been a week of huge economic reports including 3 interest rate announcements, stress tests and employment data that left the dollar on the short end of the stick across the board.

The U.S. lost fewer jobs than expected in March, falling by 539,000, better than the revised March number of -699,000 and the expected -590,000. The unemployment rate however, rose to 8.9% as expected. Analysts expect the number of job losses to continue to fall as the economy starts to recover. More than 5.7 million jobs have been lost since the start of the recession in December 2007, with than half occurring in the last 6 months. March numbers were revised lower to show a steeper loss of 699,000. Average hourly earnings increased 0.1% to $18.52, up 3.2% from a year ago.

The Euro (Eur/Usd) The euro surged on Friday, breaking above the 200 day simple moving average, and closing above the 1.3600 level. Positive non-farm payroll data Friday morning, led traders to become more risk tolerant, selling the dollar, as indications continue to cause optimism that the worst of the recession is over. The pair gained more than 200 pips on the day and approximately 350 for the week. German trade balance and industrial production posted better than expected results. The trade balance surplus strengthened to 8.9B while industrial production came in at 0.0%, better than the expected -1.3%  
The Pound (Gbp/Usd) Cable skyrocketed 230 pips on Friday, closing at the highest level since January 2009. The pound strengthened against the dollar as the greenback weakened across the board after the employment data was released and after traders’ fears were calmed with the release of the stress test results. U.K. input factory prices declined for the first time in four months. Input prices, the price at which producers and manufacturers buy materials, declined in April by 1.0%, more than expected. The pair closed the week higher by 330 pips, above the 1.5200 level.

The Aussie (Aud/Usd) Better than expected U.S. employment data, Fed Chairman Bernanke sounding optimistic about the stress tests and global equity markets posting strong gains all benefitted the Australian dollar on Friday. The positive news caused traders’ to abandon safer assets, such as the dollar, and move into higher yielding assets, such as the Australian dollar, as risk tolerance increased. On Friday the pair gained almost 150 pips, closing above 0.7650 and added 365 pips for the week.

The Cad (Usd/Cad) The cad lost approximately 200 pips on Friday as positive Canadian employment data coupled with better than expected U.S. employment data and rising equity markets led to the Canadian dollar strengthening against the greenback. The Canadian unemployment rate remained at 8.0% in April and the economy added 36,000 jobs in April. The pair closed the week testing the 1.1500 level as support and trading below all of the major daily simple moving averages.

The Swissy (Usd/Chf) As has been mentioned many times before, the swissy is a good indicator of overall dollar strength/weakness. On Friday, the dollar weakened across the board and that was reflected in the swissy. The pair lost almost 250 pips, on the day, testing the 1.1050 level at the close. For the week, the pair dropped almost 300 pips. The Swiss unemployment rate rose to 3.4% in April from 3.3% in March.

The Yen (Usd/Jpy) Market sentiment is now dollar negative and that was reflected in the yen on Friday as the pair dropped 70 pips despite equity markets moving much higher. As positive economic reports are released, speculation continues to grow that the worst of the recession is over and traders continue to sell the dollar. The pair closed Friday caught up between the 20, 50 and 200 day simple moving averages, which provided both support and resistance all week, and will need to break free before there is a significant move higher or lower. On the week, the pair lost 80 pips.