Dollar and yen surge sharply in early US session after disappointment from Non-Farm Payroll report. US job market expanded by 431k only in May, much lower than expectation of 500k. More importantly, taking out 411k. Unemployment rate dropped from 9.9% to 9.7%. Canadian data showed the economy added 24.7k jobs in May, slightly above expectation of 20k. However unemployment rate was unchanged at 8.1% versus consensus of a drop to 8.0%.

EUR/CHF rode on comments from Swiss Economy Minister Doris leuthard that there are limits to SNB intervention and dived sharply today. There was also additional pressure on Euro from Hungary's situation after EC president Barroso urged Hungary to speed up its fiscal consolidation. The psychologically important level 1.4, where SNB intervened two weeks ago, is taken out with ease and EUR/CHF dropped to as low as 1.3865 before recovering. Selloff in EUR/CHF also triggered broad based weakness in Euro with EUR/USD broke through recent low of 1.2110 and is heading towards 1.2 level.

In Japan, the Democratic Partly overwhelmingly elected Naoto Kan, the current finance minister and deputy prime minister, as its leader today and the vote will also secured Kan's position as the next prime minister. Kan is known for his preference on a weaker yen and more quantitative easing. But, analysts expect that there won't be drastic change in the Japan's foreign exchange policy as Kan was already the finance minister. Yen recovers today with help from risk aversion.

Dollar index's strong break of 87.46 resistance today confirms that whole medium term up trend from 74.19 has resumed. Further rally should now be seen to 2009 high of 89.62 next. On the downside, break of 86.89 minor support is needed to be the first signal of topping. Otherwise, outlook will remain bullish.

EUR/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.4021; (P) 1.4098; (R1) 1.4142;

EUR/CHF dives sharply today and broke 1.4000 key support level without hesitation. The longer term down trend has resumed and initial target of 61.8% projection of 1.5138 to 1.4002 from 1.4587 at 1.3885 is already met. Short term outlook will now remain bearish as long as 1.4109 support turned resistance holds. Sustained trading below 1.3885 will target 100% projection at 1.3451.

In the bigger picture, the strong break of 1.40 confirms long term down trend resumption and such down trend is expected to extend further towards 100% projection of 1.8234 to 1.4391 from 1.6827 at 1.2984 in the longer run. On the upside, break of 1.4587 resistance is needed to confirm medium term reversal. Otherwise, outlook will remain bearish.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised 09:00 EUR Eurozone GDP Q/Q Q1 P 0.20% 0.20% 0.20% 0.10% 09:00 EUR Eurozone GDP Y/Y Q1 P 0.60% 0.50% 0.50% -2.10% 11:00 CAD Net Change in Employment May 24.7K 20.0K 108.7K 11:00 CAD Unemployment Rate May 8.10% 8.00% 8.10% 12:30 CAD Building Permits M/M Apr 5.40% -1.50% 12.20% 12:30 USD Change in Non-Farm Payrolls May 431K 500K 290K 12:30 USD Unemployment Rate May 9.70% 9.80% 9.90% 14:00 CAD Ivey PMI May 59.5 58.7