NEWS / Foreign Exchange

U.S Market Update

- The US calendar is ???packed to the gills??? today. The data begins at 8:30 ET with the release of the April personal income, personal spending, the PCE deflator, PCE core, as well as the May changed in non-farm payrolls, unemployment rate, change in manufacturing payrolls, average hourly earnings, and average weekly hours. The data continues at 10:00 ET with the release of April pending home sales, along with May ism manufacturing, Ism priced paid, and the final University of Michigan confidence.

- Regarding today??™s data, personal income is expected to decline to 0.3% in April from 0.7% in March, while personal spending is expected to rise to 0.4% from March??™s reading of 0.3%. The April PCE deflator is expected to decline to 2.2% in April from 2.4% in March, while the PCE core is expected to rise to 0.2% from March??™s reading of 0.0%. The change in non-farm payrolls is expected to rise to 132K from April??™s reading of 88K, while the change in manufacturing payrolls is expected to rise to ??“15K from ??“19K in April. The May unemployment rate is expected to remain unchanged from Aptil at 4.5%. Average hourly earnings are expected to rise to 0.3% from April??™s reading of 0.2%, while average weekly hours are expected to remain unchanged from April at 33.8. At 10:00 ET April pending home sales are expected to rise to 0.3% form March??™s reading of ??“4.9%. May ism manufacturing is expected to decline to 54.0 from 54.7 in April, while ISM prices paid is expected to remain unchanged at 73.0. Finally, the final University of Michigan confidence for the month of May is expected to decline to 88.0 from the previous reading of 88.7.

- There is no new supply in the US today, however there are a few Central Bank speakers scheduled as well as speakers from the Treasury. The Fed??™s Kroszner is scheduled to speak on the US economic outlook in Greece at 4:30 ET. The Treasury??™s Lowery is scheduled to speak at 9:00 ET, while the Treasury??™s Swagel is scheduled to speak at 10:00 ET. Former Fed chairman Alan Greenspan is scheduled to speak at 17:15 ET.

- Regarding today??™s non-farm payrolls data, the first derivatives auction put payrolls at 121.3K, while the following auction put payrolls at 121.2K. Additionally note that Wednesday??™s employment change was 97K.

- In Fed speak overnight the Fed's Kroszner said that risks to inflation are failing to moderate. Kroszner noted that sub-prime mortgage problems are likely to remain contained. Kroszner said that resource pressure, and energy costs are inflation risks, and said that the recent slowdown in productivity could be transitory.

- In European economic news overnight Swiss consumer prices declined to 0.2% m/m in May from April??™s 1.1% (which was the highest since November of 1991). Y/Y consumer prices remained unchanged at 0.5%. German retail sales for the month of April rose to 2.6% m/m, above estimates of 0.8%, and declined by less than expected to ??“0.6% y/y. Manufacturing PMI figures in the Euro-Area were mixed with both Italy and France exceeding analysts??™ expectations, while Germany and the Euro-Zone fell below expectations. The Euro-Zone unemployment rate, which was expected to remain unchanged at 7.2%, fell to a 7.1%, its lowest level in over a decade.  As expected, preliminary first-quarter GDP in the Euro-Zone was 0.6%.

- In Asian economic news overnight Japanese housing starts declined by less than expected to ??“3.6% in April from 5.5% in March, while annualized housing starts declined to 1.291M from March??™s reading of 1.304M. Japanese construction orders rose to 1.8% in April from ??“1.6% in March. The Nikkei 225 closed up 0.47% overnight, while the Hang Seng closed down 0.15%, and, over in Australia, the ASX 200 closed down 0.32%.