• US nonfarm payrolls rise 69,000 in May; April revised down to +77,000 from 115,000;
• US unemployment rate rises to 8.2% from 8.1%
• ISM index falls to 53.5 in May from 54.8 in April
• US 10 year note closes at record low yield of 1.457%
• Gold rallies above $1600 on prospects for easier global central banks
• Oil falls 4% to 83.20

According to our friends at Dow Jones.

• Net short 203k versus -195k a week
• AUD net short doubled: -35.5 k this week versus -16.9 last week

• Selling at a 13.8 mln annual unit rate

Since autos make up a big chunk of US manufacturing, it’s easy to see why the ISM has turned lower…

Not hearing much in terms of order books this afternoon but the price action suggests sellers remain camped out at the 1.2450 level and above.

Short-term specs will set stops above the day’s 1.2457 highs while shorts will continue to look to trim positions on dips back toward 1.2365.

In about 15 minutes we will get the CFTC commitments of traders report. No doubt it will show another record EUR short…

…I think I will be quiet now  and wait for Monday. 

EURUSD fails again above 100 hour MA.

This is the hourly chart going back to the beginning of the month. Apart from May 21 and May 22, the price has closed below the 100  hour MA the entire time.   Earlier today the price moved above the MA line at 1.2440 but came back off.  The current bar moved above the 100 hour MA at 1.2432 and is looking to have the first close above since May 22nd.  Something is different.   If the price can close above moving average, this would turn the bias to bullish.  As long as the price can remain above, the price can explore higher with the 200 hour MA the next key target (green line in the chart above).  I would think a move below 1.2420 could be the stop.  The problem, of course is the weekend.   Traders who feel comfortable with the risk, could go long and look for extension higher over the weekend. There could be a gap one way or the other way over the weekend.

Amid growing hopes for another round of central bank liquidity injections, dollar longs are being pared ahead of the weekend.

While this week was they key as far as economic data is concerned, next week is the key for the central banks, with the ECB meeting on Wednesday and the BOE on Thursday.

The ECB has the most options. It could annou8nce more LTROs (though there is not very much good collateral left in Europe to be pledged. It could restart the bond buying program. It could cut the refi rate to 0.75 or even 0.5% from 1.0%.

The BOE could add another GBP 25 or 50 bln to its QE program.

With US rates below 1.5%, it’s hard to see what good more Fed buying would do, but they could announce more in mid-June just to show the market they are doing something…

EUR/USD trades in the high 1.2430s, eying intraday highs at 1.2457. A bear-term bottom certainly appears to be in place  and will be confirmed with a close above 1.2430. A correction could continue through the early part of next week before ECB jitters cap a bounce.

1.2625 would be the top of any rebound with 1.2565 a tough nut to crack along the way.

US DATA: North-American car sales in May at 4.5 mn rate with 100%
reporting, trucks 6.0 mn annual rate with 100% reporting.

That phrase usually pertains to stocks as before all stocks were correlated at 1, they used to actually trade in somewhat uncorrelated fashion, with some going up, some going down and some going up or down faster than the market…

We’ve gotten used to commodities all rising and falling together in recent years as aggressive use of novel forms of monetary easing has captured the imagination of those who prefer physical goods as an inflation hedge over paper securities.

The only commodity playing the inflation game today is gold (and it’s little brother silver). Pretty much everything else is getting belted on the back of clear evidence of a sharp deceleration in global growth.

Inflation looks to be light years away is slack in the global economy and scant demand for money keep all that extra liquidity holed up in the world’s central banks.

Oil and copper eventually get consumed. They are falling like rocks. Gold moves from one portfolio to another. I think oil and copper are telling us more about the world than gold.

by Brai Odion-Esene

WASHINGTON (MNI) – President Barack Obama on Friday said the raging
sovereign debt and banking crisis in the euro area is beginning to seep
across the Atlantic and “cast a shadow” on the U.S. economy.

“Our economy is still facing some serious headwinds,” Obama said in
remarks at the Honeywell Golden Valley Facility in Golden Valley,
Minnesota, where he renewed calls for Congress to act on his “To Do
List” to aid growth.

He pointed to the spike in gasoline prices a few months ago, which
– although now on a downward trend — “are still hitting people’s
wallets pretty hard.”

And more recently, the crisis in the eurozone “is having an impact
worldwide and is starting to cast a shadow on our own as well,” Obama
said.

The economy is growing again “but it’s not growing as fast as we
want it to grow,” the president said.

The Bureau of Labor Statistics Friday reported that private
businesses added 82,000 jobs last month, and overall non-farm payroll
employment rose by 69,000. The unemployment rate saw a slight increase
from 8.1% in April to 8.2% in May.

Obama said the May employment data underlined that the economy is
still not creating jobs “as fast as we want.”

So there is still a lot of work to be done before the country gets
to where it needs to be, he said.

“All these factors have made it even more challenging — not just
to fully recover — but also lay the foundation for an economy that’s
built to last over the long term,” Obama said. “We knew the road to
recovery would not be easy, we knew it would take time.”

Still, “We will come back stronger, we do have better days ahead,”
the president declared.

Obama’s words echoed those of his top economic adviser, who earlier
Friday cautioned that the problems in the job market will not be solved
overnight.

Council of Economic Advisers Chairman Alan Krueger said following
the release of the jobs data that the economy is growing but “it is not
growing fast enough,” and also cited the eurozone crisis and the sharp
rise in gas prices as “serious headwinds” to the economy.

“It is critical that we continue the President’s economic policies
that are helping us dig our way out of the deep hole that was caused by
the severe recession,” Krueger said.

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MGU$$$,MFU$$$,MAUDS$]

• Bank resolution and deposit insurance schemes are long-term projects; must be initiated to restore confidence
• European capital markets coming to a point where it puts euro project at risk

Sounds a bit panicked, does he not?

Can’t rule out an ECB move late next week at the June meeting.

• Cuts growth for the August-October quarter to 2% from 3%
• Q2 was left unchanged at 2.5% and Q4 at 2%

I happened to be in London for the last jubilee. I very much enjoyed the fly-over by Concorde, but I guess there won’t be a repeat of that this time around.

Given his great love for the monarchy, Gerry will be here spending the jubilee with all of us. Peter will be representing ForexLive at the festivities across the UK…

Not for nothing, but the UK will have a four-day bank holiday to celebrate. That should do wonders for GDP…

WASHINGTON (MNI) – The following is an initial summary of the March
U.S. sales performance of select auto manufacturers announced Friday:

* General Motors Friday reported May sales of 245,256 vehicles
in the United States, up 11% year over year and the highest monthly
total since August 2009 when dealers delivered 246,479 units. GM retail
sales were up 14% year-over-year and the retail mix was 70%. Fleet sales
increased 3%. Buick and GMC both reported sales increases of 19% and
Chevrolet was up 10%. Sales of GM small and compact cars were up 16% in
May versus a year ago. Combined sales of all seven Chevrolet, Buick, GMC
and Cadillac crossovers were up 14% versus a year ago. Full-size pickup
sales were up 23% year over year, mid-size pickup sales were up 34% and
full-size SUVs were up 14%.

* U.S. sales totaled 216,267 vehicles in May, a 13% increase
versus year-ago levels. Retail sales increased 12%. Overall, cars were
up 6%, utilities were up 12%, and trucks improved 21%. Ford also
announced its third-quarter North American production plan. The company
plans to build 690,000 vehicles in the third quarter, up 5 percent
(34,000 vehicles) from the third quarter 2011. Second quarter production
of 730,000 vehicles is unchanged from the previous guidance.

* Chrysler Group Friday reported U.S. sales of 150,041 units, a
30% increase compared with sales in May 2011 (115,363 units), and the
group’s best sales in the month of May since 2007. Chrysler Group
recorded its 26th-consecutive month of year-over-year sales gains and
its 12th-straight month of sales increases of at least 20%. Chrysler
brand sales were up 81%; best May sales in four years. Chrysler Group
finished the month with a 61-days supply of inventory (351,804 units).

* American Honda Friday reported May 2012 U.S. sales of 133,997
units, an increase of 47.6% compared to May 2011 (an increase of 36.3%
based on the daily selling rate). The Honda Division posted May 2012
sales of 119,411 units, an increase of 46.0% compared to May 2011.
Acura’s U.S. May sales of 14,586 units increased 62.1% compared to May
2011.

* Nissan North America Friday reported May U.S. sales of 91,794
units versus 76,148 units a year earlier, up 20.5%. Nissan Division
sales increased 16.4% for the month at 81,202 units. Sales of Infiniti
vehicles were up 65.8% over the prior year, to 10,592 units. Nissan’s
lineup of trucks and SUVs delivered strong gains, with sales increases
across the lineup, including: Frontier up 17.2%; Titan up 86.7%;
Pathfinder up 32.6%; and Armada up 26%.

* Subaru of America Friday reported sales for May 2012 of 29,724
vehicles, a 48.35% gain over May 2011. The company also reported
year-to-date sales of 136,602, a 21.7%% gain over the prior year.

* Mercedes-Benz USA Friday reported May sales of 22,515 for its
Mercedes-Benz models, a 19.2% improvement over May 2011, delivering a
year-to-date total of 106,364 new vehicles to customers, up 17.8%.
Combined sales of Mercedes-Benz passenger vehicles, smart and Sprinter
for the month totaled 25,259, up 24.4% bringing a year-to-date total of
117,231, up 22.8%, making this the company’s highest May on record.

* Kia Motors America’s Friday reported its best-ever May sales
of 51,771 units, a 7.4% increase over the same period last year.
Year-to-date sales are up 18.7%.

* Porsche Cars North America Friday announced May 2012 sales of
2,852 vehicles. This compares to 2,817 vehicles last May, for an
increase of 1%. For the year, Porsche has sold 13,448 cars in the U.S.,
which is a 3% increase over last year’s sales of 12,996.

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MAUDS$]

That one’s from Metron Analysis.

Polls are banned after Sunday but I imagine hedge funds and investment banks will fund private polls. That’s some valuable information right now, hopefully the info leaks out so the little guy isn’t left in the dark.

By Brai Odion-Esene

WASHINGTON (MNI) – Philadelphia Federal Reserve Bank President
Charles Plosser said Friday he is committed to increasing the clarity of
the Fed’s public communications about current economic conditions, the
economic outlook, and its policymaking framework, saying steps taken by
the central bank so far are a work in progress.

“We can and should improve our discussion of the economy and our
approach to policy through the publication of a more comprehensive
monetary policy report to the public. We can also better define our
reaction function, to enable the public to better understand and
anticipate future policy actions,” Plosser writes in the Philadelphia
Fed’s annual report published Friday.

“Economic research has shown that increased transparency can
improve the effectiveness of monetary policy, as well as the Fed’s
accountability with the public. But the benefit depends on the public’s
understanding of the policymaking framework,” he added.

Plosser also stresses the importance of finding ways to ensure the
Fed preserves its independence and that “the boundaries between monetary
and fiscal policy are restored.”

On the increased transparency front, Plosser — who sits on the
Fed’s communication committee — focuses on two steps he has mentioned
in the past as ways for the central bank to improve public understanding
of policy.

The first is for the Fed to publish a more comprehensive monetary
policy report four times a year. Currently, Fed Chair Ben Bernanke
testifies before Congress on monetary policy on a semi-annual basis, and
submits a written report.

Bernanke also now holds separate press briefings four times a year
to summarize the economic projections of the Federal Open Market
Committee, while the subsequent minutes of the FOMC meeting provide
additional information on policymakers’ views on the economy.

“I think there is an opportunity to combine these efforts to create
a more comprehensive report on monetary policy,” Plosser said.

“I think the Fed should consider producing a similar report to
elaborate and reinforce its policy framework and how it relates to
economic conditions. These reports will help improve the public’s
understanding of policy, which will help make policy more effective and
the central bank more accountable,” he argues.

Plosser also pushes, once again, for the FOMC — which is the Fed’s
policymaking body — to adopt clearer guidelines on how policy evolves
with economic conditions.

“The better the public and the markets understand how policy is
likely to be adjusted as the economy changes, the more predictable
policy becomes, which promotes price stability and better economic
outcomes,” he said.

“The history of U.S. monetary policy is filled with stops and
starts and changes in direction, yet the Fed has communicated little
about what drives those decisions,” Plosser adds.

So the Fed should provide more clarity regarding its “reaction
function,” — the factors that will influence their policy decisions —
he said.

“The practice of using systematic rules as guides to monetary
policy imposes an important discipline on policymaking and improves
communication and transparency. This is because systematic rules make
policy more predictable and therefore help the public and markets make
better decisions,” Plosser said.

And as an added benefit, “systematic policy also reduces the
temptation to engage in discretionary policies,” he continues.

Plosser acknowledges however, that the FOMC “is still some way”
from agreeing on one systematic policy rule or reaction function, adding
that such choices will involve “elaborate discussions and agreement on
the appropriate class of models and an agreed-upon loss function.”

Plosser also expresses concern over how the combination of a
financial crisis and sustained fiscal imbalances has led to a breakdown
in the accepted barriers between monetary and fiscal policy.

“It is simply good governance to keep a healthy degree of
separation between those responsible for tax and spending policies and
those responsible for monetary creation,” Plosser said. “We need to
restore the boundaries.”

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]

• Narrowed to EUR 4.3 bln in May versus EUR 5.1 bln a year ago
• Year to date deficit EUR 35.1 bln versus EUR 44.9 bln

Looks like austerity is paying dividends for Italian state finances…

In a consumer-driven economy like the United States, mass psychology is a factor. This weekend, there will be a barrage of stories about ‘the worst jobs report in a year’ and ‘world growth under threat as US sputters‘

Headlines like those make people think twice about heading to the shopping mall and it becomes a negative feedback loop:

and

…I always had my suspicions about the Green Lantern.

US DATA: Industry wide, May car sales running at 4.4 mn annual rate with
80% reporting, trucks 5.9 mn annual rate with 88% reporting.