It’s very telling that FX markets are in such buoyant mood at this very early stage of the month. Normally the US employment report is taken as a sufficient reason to hold back, especially when it occurs on the first trading day.

But what’s happening is that investors are not waiting. We’re seeing the euro moving higher with reports from investment banks of volumes significantly above average. This has seen some key pairs move out of the more range bound activity seen for most of the week to date. EURGBP is one example, having moved above the 0.86 level after a period of consolidation just below. EURUSD is pushing towards the 1.37 area, whilst USDJPY has broken above 92.00. At the same time, EURJPY has pummelled through the 125 level.

The only data so far that could justify the move has been the slightly better than expected final PMI data for the Eurozone, revised from 47.5 to 47.9. So whilst the initial move higher was prompted by the firmer country data and especially from Germany (where the biggest upward revision was seen), the fact that the gains have been sustained suggests there is decent buying interest under-pinning it. The softer CPI reading for the Eurozone (2.0%, from 2.2%) and the lack of reaction to the weaker reading further underlines the euro’s resilience.

Finally, note that commodity currencies (CAD, AUD) are underperforming, further illustrating that we really having ditched the “risk-on, risk-off” dynamics that have dominated FX markets for much of the post-credit crisis history. We’ve been alluding to this for some time (see “From RORO to MORO”) and today’s notable moves underline that we are continuing to build a new world order in FX.