Dollar remains rather steady in early US session after another poor employment report from US. Non-Farm Payroll report showed -598k contraction in Jan, largest monthly decline since 1974 and much worse than expectation of -525K. Unemployment rate climbed to 16 year high of 7.6% in Jan, above expectation of 7.5%. Jan's figure also marketed the first time since records began in 1939 that job cuts exceeded half a million in three consecutive months. Unemployment rate in Canada rose much more than expected to 7.2% in Jan, highest level since 1003 and much worse than expectation of 6.8%. The job market contracted for the third consecutive months by -129k, exceeding any monthly drop on recrod and much worse than consensus of -40k. The Canadiand dollar is sold off immediately following the release and is also pressured with crude oil back below 40 level.

In the UK, industrial production plunged -1.7% mom in December following a revised -2.5% in the previous month. On yearly basis, the -9.4% plunge, worse than both consensus of -7.9% and -7.8% in December, was the biggest decline since 1981, Manufacturing output contracted -2.2% mom, after a fall of -3% in November. The -10.2% slump on annual basis was also the weakest figure since 1981. In November, the reading was revised lower to -8.3% from -7.4%. The data showed that the UK's recession deepened and BOE may need to further reduce its policy rate as well as adopt other quantitative easing measures. PPI data surprisingly rose more than anticipated in January with the core index, excluding food, beverages, tobacco, and petroleum products, rose 0.4% mom (consensus: 0.1%, December: 0.2%). On yearly basis, core PPI eased to 4.1% from 5% a month ago. Input PPI gained 1.5% mom in January following a revised 2.4% drop in December while output PPI rose for the first time in 6 months by 0.1% from a fall of 0.1% in December. On yearly basis, input and output PPI moderated by 1.5% and 3.5% from 3.5% and 4.6%, respectively.

Switzerland's unemployment rate rose more-than-expected by 3.3% in January from 3% in December. Germany industrial production also dropped more than expected by -4.6% mom, -12.0% yoy in Dec.

RBA released its quarterly Monetary Policy Report overnight with downward revisions on GDP and CPI forecasts in the 12 months through June. The committee anticipated GDP will rise 0.25%, lower than the 1.5% projected in November. GDP will growth 0.5% and 2.5% in fiscal years 2009 and 2010 respectively. CPI is expected to gain 1.75% in the 12 months through June, also lower than 3.25% forecast in November. Despite the reductions, the RBA Governor Glenn Stevens stated there's upside risk to the growth forecasts and 'when demand returns, production will pick up more quickly than in past cycles'. In Japan, December's leading indicator is anticipated to have dropped to 79 from 81.3 in the previous month.

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.2236; (P) 1.2308; (R1) 1.2392; More .

USD/CAD rises sharply in early US session and break of 1.2521 resistance suggests that rise from 1.2024 is resuming for a test of 1.2765 resistance. But after all, it's still staying in choppy trading in converging range. Recent price actions from 1.3015 might be unfolding as a contracting triangle and further choppy sideway trading could still be seen. We'd stay neutral until either a break of 1.2765, which suggests a break out, or a break below 1.1761, which invalidates the triangle scenario.

In the bigger picture, there is no confirmation of completion of medium term up trend from 0.9056 yet. Such rise is expected to be developing into a five wave sequence (1.0378, 0.9823, 1.3015, ......). Consolidation from 1.3015 and is probably developing into triangle pattern. Break of 1.2765 will be the first signal that such consolidation has completed. Further decisive break of 1.3005/15 will confirm medium term up trend resumption and should then target 61.8% retracement of 1.6196 to 0.9056 at 1.3469. On the downside, below 1.1761 support will invalidate this case and suggests that deeper fall would be seen to retest 1.1464 before completing the consolidation.