Today’s US jobs data – while not great by any stretch of the imagination – did help ease some of the more pessimistic outlooks about the US as not only did the economy  have a better number of private jobs created in August, the upward revision for June and July were a welcome sign. Stocks were up as was risk appetite, meaning our commodity currencies tied to global growth like AUD, CAD, NZD jumped, as did higher yielders – the EUR and GBP. Safe haven currencies like JPY, CHF, and USD weakened.

Currency markets mainly consolidated ahead of tomorrow’s non-farm payroll report. The ECB extended its unlimited cash to banks throughout this year, an attempt to not take away special liquidity measure when financial markets remain fragile. US data showed labor productivity slid in the 2nd quarter – a sign companies may have to start hiring, while a measure of pending home sales surprised on the upside – a rare positive release for the US housing market.

Manufacturing releases from China and the US, and a very strong 2nd quarter GDP report from Australia helped to propel global stocks to strong gains. In NY morning trading the Dow Jones Index for instance was up 240 points. That helped “”higher yielders” like the Australian and Canadian Dollars, the Euro and the Pound gain on safe haven currencies like the US Dollar.

Today’s session was market by Euro strength, which was either a correction to the swings we saw the begin the week, or some end of the month flows that boosted demand for the Euro. We saw safe haven currencies continue to gain otherwise, with the Yen and US Dollar gaining on commodity currency pairs, while the Swiss Franc hit a fresh all-time high against the Euro, and hit its highest this year.

The BOJ in its emergency meeting announced an expansion of its loan program – a bit of monetary easing. However, the moves were less than expected by the market and traders bought the Yen after having sold it off late last week and to start Sunday’s trading. Currencies sensitive to risk sentiment and global growth faltered, with the US Dollar and Swiss Franc gaining. US stocks slid increasing risk aversion in the NY session.

Bernanke outlined what he thinks the central bank will have to do if the economy continues to weaken further. Steps include more quantitative easing or lowering the rate paid to banks to hold reserves with the Fed. Still, he tried to focus on the sustainability of the recovery, and tried to calm fears over deflation. The result was a rally in stock and risk appetite which helped to power higher yielders higher (like the Euro, Aussie) vs. safe-have assets (Yen and Dollar).

The US Dollar slid against its major rivals as higher global equities helped to dampen demand for safe-haven currencies like the US Dollar and Japanese Yen. The weakness in the Dollar overnight was also due to the weak data that has come out this week, which has led to increased speculation that Fed Chairman Bernanke may suggest further quantitative easing during his speech on Friday at the Jackson Hole Symposium.

Trading wasn’t as volatile as it was yesterday, with Yen pairs consolidating, while overall higher yielding currencies like the Canadian and Australian Dollars weaker. The Swiss Franc gained on the US Dollar and Euro. US data for durable goods orders and new home sales was weaker thane expected, meaning risk aversion should be the theme of the day during NY trading.

With weak data from the US worrying investors, we saw a dash towards safe haven in currency markets. The Yen hit a 15-year high against the Dollar, and a 9-year against the Yen. A very weak home sales report pressured the Dollar in NY trading, as it gave up its earlier gains against the Euro, and pared a good chunk of its gains against higher yielders like the Canadian Dollar.

The week starts with the EUR/USD pair staying below the 1.2730 following Friday’s comments from ECB official Axel Weber and overnight data on manufacturing and services. We highlight the concerns facing the Euro. The Yen gained on the greenback, as it seems less likely that the BOJ will intervene in markets. The Aussie fell to open the week following an election in which no party won a majority, but then rallied on merger and acquisition news.