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EUR/USD plunges after the superb US Non-Farm Payrolls. The lower chances of QE3 in the US send the dollar higher against the majors, including against the yen, which sometimes acts differently.

Yet with commodity currencies the story is totally different, with gains seen in AUD, CAD and NZD.

The US gained 243K jobs in January, and enjoyed upwards revisions. The unemployment rate fell from 8.5% to 8.3%. This wasn’t expected. The most amazing thing is that the US labor force actually grew during the month by 250K.

QE3 is dependent on high unemployment and low inflation. Unemployment continues to improve, and at a better pace. The chances of more dollar printing and debasing are now significantly lower.

Two sets of currencies

After a usual choppy reaction, the dollar began surging. EUR/USD dropped to a lower range: 1.3060 to 1.3145, and currently trades at around 1.3120. The move is far from over, and the European troubles could exacerbate the situation.

GBP/USD lost the 1.58 line. USD/JPY finally emerged from the abyss, bouncing off 76 and challenging the almighty 76.60 line. USD/CHF is challenging 0.92.

Commodity currencies are totally different: USD/CAD is now falling to around parity, despite weak Canadian job figures. A strong US is good for Canada. No doubt.

AUD/USD is moving to higher ground around 1.0750. NZD/USD is resuming its attack on 0.8340.

Explanations

Commodity currencies are enjoying risk appetite as they expect stronger global growth and are well positioned for that.

Majors are worse off: economies are stuck. The fuel for their gains against the greenback was QE3. With less chances of this happening, they fall.

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