[AndrewWoo]

Friday's better than expected US job loss report of only -345k initially sent the USD tumbling on the risk positive/USD negative theme. But Fed's Lacker unwound things quickly with a comment that the Fed could expand quantitative ease, buying more US Treasuries, and still raise short term interest rates, and USD buying was all the rage as US yields rose quickly in the USD against G10. Euro/dollar tumbled 3 cents from 1.4265 and continued overnight, to a ten day low near 1.3805 in London. Traders cited today's S&P downgrade of Ireland sovereign debt, from AA+ to AA, its second downgrade in 3 months, S&P noting fiscal cost of bank support and debt load. EU Parliament elections were also Euro negative, as socialist leaders were trounced in favor of the right, and center-right parties called for less fiscal stimulus. Hence, conservative opposition won in Spain and the UK, where Brown's Labor party was even beaten by an anti-EU far-right party, another blow to Brown's tenure at 10 Downing. Commodities have drifted lower, exacerbating losses by AUD and CAD, already undone by rate hike fears from the US. Interest rate futures price in a 36% chance of a Fed rate hike by September, from 15% a week ago. Meanwhile the USD DXY index is at a 2 1/2 week high as support for the USD debasement currency (inflation with low interest rates) has been reduced and markets have reversed direction to view good news for the US economy as USD positive.