Even the most optimistic analysts had not foreseen how strong today's Non-farm Payroll and Unemployment rate data would turn out.  Indeed, traders are still rubbing their eyes in disbelief: the NFP was out at -11k vs. a forecast of -119k, and the Unemployment rate decreased from 10.2% to 10%.  Normally, strong economic data has fed into the weak dollar/riskier assets trade, but the data caused USD to whip higher powerfully.  The reason is that the market is revising its interest rate outlook for the Dollar in 2010, and beginning to price in both a faster tightening of monetary policy and a closer horizon for interest rate hikes by the Federal Reserve.  The reaction in gold, EURUSD and USDJPY was clear as a massive amount of short-dollar positions were closed out and not a few long-dollar positions entered.  Gold dropped $25 on the news to $1185 and EURUSD dropped over 150 pips before rebounding from 1.4914.  USDJPY has reached a high of 89.88, after reaching 14-year lows around 84.81 last week.  Looking to the economy, the strong employment data is pushing stocks to new 2009 highs: currently the Nasdaq 100 has touched $1813 and the S&P 500 was close to its 2009-high reaching $1118 after the news.  Crude oil, which has also rallied on a weak U.S. Dollar this year, is now rallying on the improved outlook for demand as the recovery takes speed.

US Non-farm Payrolls Change 2008 - 2009