Markets shrugged off the Dubai World debt crisis and resumed the bull rally, but the better-than-expected U.S. jobs report changed the game, boosting USD while constraining commodities and their currencies. Gold withdrew from historic highs.

The RBA raised interest rates by 25bps to 3.75%. October retail sales rose 0.3% m/m, new home sales declined −0.6%, and private sector credit continued its downward trajectory both m/m and y/y. November PMIs printed 51.2 manufacturing, 52.5 services, and the RBA commodities index improved to −25.3 y/y. AUD/USD climbed to test 0.9325 for the second consecutive week only to fall back again, this time driven by the U.S. jobs data, closing at 0.9142.

U.S. data were mixed, with November employment losing only 11K jobs, the jobless rate lowering to 10.0%, and October pending home sales rising 3.7% m/m. However, November PMIs printed 53.6 manufacturing, 48.7 services, both slightly lower than previous. The overall picture, as painted by the Fed Beige Book, is of stabilisation and slight expansion.

The ECB left rates at 1.0%, as expected, and began plans to remove excess liquidity from financial markets. 3Q2009 GDP printed 0.4% q/q, −4.1% y/y, with household consumption declining −0.2% q/q and CAPEX −0.4%. The first estimate of November CPI rose to 0.6% y/y, with October PPI also gaining with 0.2% m/m, −6.7% y/y. October unemployment held steady at 9.8%, while retail sales were flat m/m, −1.9% y/y. November PMIs printed 51.2 manufacturing, 53.0 services, and 53.7 composite. EUR/USD rose to test last week’s high near 1.5140 but retreated on the U.S. jobs data, falling to close at 1.4845.

U.K. November consumer confidence slid to −17, worse than market expectations, and October consumer credit decreased £0.6Bn. November PMIs printed 51.8 manufacturing, 47.0 construction, and 56.6 services. GBP/USD tracked EUR/USD, rising to test last week’s highs at 1.6720, then falling to close at 1.6446.

Canada broke from the recession with 3Q2009 GDP printing 0.4% annualised. November Ivey PMI printed 55.9, below the October reading. However, in November the economy added 79.1K jobs and the unemployment rate eased down to 8.5%. USD/CAD tested the previous week’s low near 1.0425, then whipsawed between the two strong jobs reports, closing at 1.0578. AUD/CAD also could not sustain the rally and U-turned on the jobs data, falling to close at 0.9670.

New Zealand’s October building permits increased 11.7% m/m, November commodity prices 10.5%. USD/NZD could not reach the previous week’s highs and fell to close just beneath support at 0.7152. Note that this is the third consecutive week with a lower high. AUD/NZD trended higher, closing at 1.2773.

The BoJ left the target rate unchanged at 0.10%, as expected, and government ministers and central bankers provided markets grand entertainment all week discussing publicly their divergent opinions on the state of the Japanese economy, how strong is too strong for the yen, and the effectiveness or otherwise of direct currency intervention with and without assistance from the ECB and Fed. November vehicle sales rose 36.0% y/y, but October construction orders dropped −40.1%. The yen weakened against most major currencies, with USD/JPY surging 4.7% to close at 90.49. EUR/JPY returned to its more accustomed trading range, closing at 134.34, and AUD/JPY climbed steadily through several resistance layers, closing at 82.74.