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The euro (EUR) rebounded from a two year low against the US dollar rising to 1.2456 from 1.2287 following the poor jobs data report from the US. Worries about the US economic recovery weakened the US dollar and EURUSD slightly recovered despite Italy’s sovereign rating downgrade by rating agency Egan-Jones on Friday. But the single currency remains under pressure as investors are worried about a problematic banking sector in Spain and Greece’s possible exit from the euro. Economic figures from the eurozone failed to boost optimism in the market after the Manufacturing PMI was revised up to 45.1 from the expected 45.0 but was lower from a previous 45.9 in April. Today, Asian shares dived on fears about the debt crisis in Europe and an economic slowdown in China. Sentiment in the market remains shaken as Spanish government bond yields surged despite hopes that Spain can recapitalize its banks without a formal reform package.

The US dollar (USD) weakened against a basket of currencies after the US Non Farm Payrolls report disappointed the markets. Figures showed that the US economy created only 69 thousand new jobs in May while the market expected 150 thousand increase. The unemployment rate rose to 8.2% in May following a drop to 8.1% in April. The poor figures fuelled expectations for a third round of quantitative easing by the Fed in order to boost the US economy. Versus the safe haven Japanese yen (JPY), the greenback dropped to 77.65 from 78.72. Bank of Japan Governor warned that the uncertainty about Europe’s debt crisis and the US economy and yen’s rise clouds the outlook for Japan’s economy. Focus turns to Thursday when the Fed Chairman Ben Bernanke will speak before a congressional committee about the US economy.

Oil edged lower to 81.47 dollars a barrel from 86.50. Gold (XAU) rallied to 1630.02 dollars an ounce from 1545.14 after the NFP and against the euro it rose to 1306.06 from 1262.13. Silver (XAG) rose to 28.69 dollars an ounce from 27.21. Stay in tune throughout the day with foreign exchange bullets!

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