The euro moved sharply lower vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.3990 level and was capped around the US$ 1.4265 level. The common currency moved lower after the release of better-than-expected U.S. May non-farm payrolls data that saw payrolls growth of -345,000, considerably better than the -600,000+ number that economists were expecting. In contrast, however, the unemployment rate jumped to 9.4% from 8.9% in April, its highest level since August 2003. Additionally, there was a cumulative +83,000 upward jobs revision to March€™s and April€™s tally, suggesting the labour market was not as weak at the beginning of the second quarter as originally expected. Still, most economists believe the ongoing U.S. economic recovery will largely be a jobless recovery as most companies are slow to rehire new workers and major U.S. industries like the automotive sector lay-off massive amounts of people. U.S. Treasury yields continue to sell-off and the 10-year Note is now yielding 3.81%, its highest level since early November. This curve steepening either reflects more optimism about the U.S. economy, increased pessimism over the U.S.€™s fiscal state, or both. In eurozone news, European Commission member Alumnia said €œthe next quarters should show positive developments and growth should turn positive in the first part of 2010.€ European Central Bank member Weber cautiously reported €œWe are currently witnessing the fact that these extensive interventions are having some stabilizing effects on financial markets and have, judging by the initial signs, probably led to a slowdown in the rapid pace of the downswing in the real economy. Nevertheless, the future outlook remains uncertain.€ Speaking on interest rate policy, ECB€™s Hurley noted €œWe haven't taken any decision that this is necessarily the lowest rate. We never pre-commit. We have to assess the data that emerges and make our decision on the basis of that data, so there's no commitment but we are closely monitoring the situation going forward.€ Euro bids are cited around the US$ 1.3435 level.
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