I know I mentioned the December 4th NFP report in previous posts but I think it is worth pointing out again since it possibly signaled the first sign of some normalization in the forex markets, namely, return to fundamentals.
On December 4th, for the first time in months, the USD rallied on good economic news and the S&P rose at the same time as well. Of course, this was a single event and far from being a trend. However, it is important to note the USD's reaction to today unemployment numbers - the report came in worse than expected and the USD's initial reaction was to decline! this is in stark contrast of what we've been seeing since March.
Another interesting thing to point out is the relative strength of currencies vs. the USD. When the unemployment number came out, the Aussie and CAD gained substantially more against the USD than did the EUR and GBP. This means we may start to further normalization where the USD gains against weaker currencies and lose ground to stronger currencies.
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