Although not as badly as last month, nonfarm payrolls came in well below expectations for the second month in a row. The December data was not revised materially, but it remains possible that both months have been impacted by much a much worse than normal winter in many regions that has wreaked havoc on economic activity. Canada, on the other hand, has gotten over the December ice storm and despite the bitter cold, saw a huge rebound in jobs with a 50K increase in full-time work partially offset by the usual post-holiday drop in seasonal part-time work. Despite recent comments from FOMC members suggesting that weather distortions and variability in data are unlikely to deter their tapering program, USD has been trading lower on today’s news. Resource currencies have been rallying led by AUD where increased inflation and GDP forecasts from the RBA further underscore the dropping of its easing bias. The Loonie is on the rebound today boosted by the stronger Canadian jobs report, with NZD and NOK also climbing. Defensive plays like gold, JPY and CHF have been underperforming as capital continues to move back to more aggressive stances with emerging market fears subsiding for the moment. Indices in Europe and North America which had been trading moderately higher through the morning have started to drop back toward flat (UK and Europe) or into negative territory (US) following the jobs news. Industrial production numbers for the UK, Germany and Spain all fell short of expectations, taking pressure off the central banks to tighten in the near term. Note, btw that next week banks are only expected to pay back about €1 billion in LTRO loans, so the ECB’s stealth taper may be winding down a bit. Natural gas is down today as it continues to get kicked around a lot as we move through the peak of home heating season. Trading remains very sensitive to storms and swings in temperature. Economic News Economic reports released overnight and this morning include: US nonfarm payrolls 113K vs street 180K, previous revised to 75K from 74K US private payrolls 142K vs street 185K previous revised to 89K from 87K US unemployment rate 6.6% vs street 6.7% Canada jobs change 29K vs street 20K and previous (44K) Canada full time jobs 50K vs previous (60K) Canada part-time jobs (21K) vs previous 14K Canada unemployment rate 7.0% vs street 7.1% UK trade balance (£7.7B) vs (£9.3B) Germany trade balance €14.2B vs street €17.3B UK industrial production 1.8% vs street 2.3% UK manufacturing production 1.5% vs street 2.3% Germany industrial production 2.6% vs street 3.5% Spain industrial output 1.7% vs street 2.4% India GDP 4.9% vs stret 4.7% and previous 4.5% RBA Monetary policy stmnt raised inflation forecast to 3.25% from 2.75%, raised GDP forecast to 2.75% from 2.5% on weaker AUD Canada Ivey PMI (from Thu) 56.8 vs street 51.0 and previus 46.3 Economic reports due later today include: 3:00 pm GMT UK NIESR GDP Estimate street 0.7% 3:00 pm EST US consumer credit street $12.0B

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