"Consumers are obviously feeling the pain of rising gas and food prices and tightening income and credit. Bernanke warned yesterday that problems of US citizents are not yet behind them, and Michigan data today showed that consumers apparently agree."

After easing off the afternoon's high, the stock market is attempting to push back toward the neutral line. General sentiment remains largely pessimistic.
Gold made a nice gain on Friday. The precious metal closed up $20.50 at just over $900 per ounce. Gold remains more than 12% off its 52-week high reached in mid-March. At that time, gold climbed to almost $1,034 per ounce.
The CRB Commodity Index is showing strength, up nearly 0.9% this session. Meanwhile, the dollar remains largely unchanged from earlier levels as the dollar index is down 0.7%.

"We are nudging up our 2Q08 GDP growth forecast from 0 to 0.5% (q/q,saar). This small change largely reflects the better than expected profile of consumer spending at the start of this quarter. We have revised up 2Q08 consumption from 1% to 1.7% (q/q,saar)."

The the stock market is trying to climb to the unchanged level, but is stalling near its afternoon high. The recent push higher was broad-based, with the exception of energy (+1.4%), which has given up a portion of its earlier gains.
Market moving news has slowed considerably, which typically happens on Friday afternoons.

The dollar fell the most against the euro in a month and depreciated versus the yen as a drop in consumer confidence and a surge in crude oil to a record increased concern U.S. economic growth will slow.
The currency dropped for the first time in four days against the euro and was down against all of its major counterparts. Canada's dollar touched an eight-week high against the greenback as the increase in oil bolstered demand for the nation's commodity exports.
``The dollar is under pressure,'' said Hidetoshi Yanagihara, senior currency trader at Mizuho Corporate Bank in New York. ``Higher commodity prices are affecting consumer confidence, casting a shadow on the economy.''
The U.S. currency, which has risen 3.4 percent from a record low of $1.6019 against the euro on April 22, is down 0.7 percent this week, its second straight decline. The yen has fallen 1.7 percent against the euro this week, the biggest drop since mid-April. It's down 0.9 percent versus the dollar.
Crude oil rallied to the all-time high of $127.82 a barrel, leading commodities higher, as Goldman Sachs Group Inc. raised its forecast for the second half of this year to $141 a barrel, citing supply constraints. The correlation coefficient between oil and the euro-dollar exchange rate has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time.
``Today it's all about oil,'' said Alan Kabbani, senior currency trader at Wachovia Corp. in Charlotte, North Carolina. ``There are a lot of dollar-negative things coming out at the same time.''The dollar weakened as a report showed confidence among U.S. consumers fell in May to the lowest level in almost 28 years. The Reuters/University of Michigan consumer sentiment index dropped to 59.5 this month, from 62.6 in April. The median forecast of 65 economists surveyed by Bloomberg News was for a reading of 62.
The euro rose earlier against the dollar as European Central Bank President Jean-Claude Trichet said the bank can't relax in its fight against inflation.
``There is no place for complacency,'' Trichet said in a speech in Brussels today. ``Price stability in the medium term has to be'' ensured. It's ``a necessary condition to sustain economic growth, job creation and social cohesion.''

Stocks are making a gradual climb off their session low. Still, the S&P 500 continues to trade with a noticeable loss.
Though opening in modest fashion, the utilities sector (+0.6%) is sporting a decent gain. The Dow Jones Utility Average (+0.5%) is leading the other Dow Indices.
In an earlier statement, Treasury Secretary Paulson stated that the housing correction won't be resolved quickly, but the economy's pace should pick up by year's end. Paulson also said the markets are considerably calmer now than in March.

Sources note backdrop of conflicting remarks in that arena today, Saudi officials reportedly stating that Saudi will produce oil sufficient to meet demand but then noting that no demand remains unfilled at present. Ecuadorean officials also reported to have advocated increased oil output.

Stocks were mixed early Friday, as any relief about a surprise jump in new home construction was countered by worries about inflation as oil and gas prices hit new records.
Stocks rose Thursday, with technology leading the way, thanks to a rash of corporate deal-making activity. The advance continued early Friday.
In the news:April new home construction rose to a seasonally adjusted annual rate of 1,032,000, the government said, topping economists' forecasts and rising from March levels. The jump was largely due to apartment construction. Building permits rose to a seasonally adjusted annual rate of 978,000, also topping forecasts and rising from March levels.

GBP/USD breaks above $1.9540, following the euro-dollar rally (while euro-sterling edges up to challenge resistance to stg0.7965). Cable meets resistance from next band of reported sell interest at $1.9550, extending to $1.9560, with further interest noted ahead of $1.9580. For EUR/GBP a break of current levels will open a move on toward stg0.7975/80 with stronger interest placed at stg0.7995/00.

- ECB to begin hiking interest rates in 2009
- Sees little risk of wage price spiral in Germany
- No credit crunch in Germany.

The stock market continues to trend along the unchanged mark. Nearly 60% of the S&P 500 components are trading lower. The preliminary May consumer sentiment survey from the University of Michigan came in at 59.5. Economists were expecting a reading of 62.0. The prior reading came in at 62.6.
Despite positive earnings surprises from Nordstrom (JWN 37.92, +0.63), Kohl's (KSS 49.02, -1.47), and Abercrombie & Fitch (ANF 76.79, 0.71), the S&P 500 Retailing Index is trading noticeably lower. The index is currently down 1.6%.

current conditions 71.7
expectations 51.7
1y infl expectation is 5.2% vs 4.8% in April
5y infl is 3.3% vs 3.2%.
data signal slowing consumption, est at +1% in 2008, and expected to slow late in the yr and into 2009.

EUR/USD: $1.5300
USD/JPY: Y104.75, Y105.50, Y103.50, Y107.50
GBP/USD: $1.9600
AUS/USD: $0.9420, $0.9385, $0.9300
USD/CAD $0.9950, C$1.0005

Stocks looked set to extend their rally Friday, although a report on the battered housing sector could pressure sentiment. Nasdaq and S&P futures were slightly higher and pointing to a positive start on Wall Street.
Companies to watch include Yahoo, which responded late Thursday to activist investor Carl Icahn's plan to unseat the company's board. In a letter that the Internet bellwether sent to the activist investor, it said Icahn had "a significant misunderstanding of the facts about the Microsoft proposal." Icahn has launched a battle for control of Yahoo's board in the hopes of rekindling takeover talks with Microsoft. Yahoo shares slipped 0.2% in after-hours trading.
In a similar filing, investment guru Warren Buffett's Berkshire Hathaway (BRK.A) Inc. disclosed Thursday that it had sold its stake in Ameriprise Financial, the financial adviser firm. It sold 661,742 shares of the firm during the first quarter, equal to a 0.3% stake. Shares of Ameriprise fell 2.7% in after-hours trading after Berkshire's filing.

Euro down to $1.5460 area in the wake of the stronger than expected housing starts data but dollar gains here are muted and euro remains above the level seen an hour ago before the surge in commodities undercut the greenback. Offers noted earlier in the $1.5520/30 area after supply clustered ahead of $1.5500 was absorbed. Bids back at $1.5450 with traders reporting lackluster flows in this pair.
GBP/USD dropped back afrom around $1.9488 to $1.9468 on release of better than expected US housing starts, but rate quickly recovers, moves back up in line with euro-dollar back toward pre release level. Cable Offers remain in place to $1.9500, a break above to open a move back toward resistance at $1.9520/25 (earlier high $1.9523). Traders have suggested that sell interest extends toward $1.9540, with stops mixed in above $1.9530. Bids remain in place between $1.9470/65, more toward $1.9450.

the next data was issued

09:00 EU(15) Trade balance (March) unadjusted, bln -2.3 0.8

The dollar drifted down versus the euro on Friday, pressured by the contrast between Thursday's weak U.S. jobs and manufacturing data and forecast-beating growth figures from the euro zone. The U.S. data injected a hint of doubt into market expectations that the Federal Reserve's aggressive cycle of interest rate cuts is over.

EUR/USD: Opened in early Europe around $1.5495. Further demand into early Europe took rate to an early high of $1.5502, though the initial move came with a lack of momentum as the pair eased back to $1.5470. Decent interest to buy the dip pushed the pair back above $1.5500 later in the morning, a Swiss private bank then said to be capping from $1.5515. Rate did manage to break though to $1.5522 before slipping back to go into early US trade back around $1.5465. Offers $1.5520/30, $1.5550, stops above, offers $1.5570/75. Bids $1.5450, stops under $1.5410
GBP/USD: Opened early Europe at $1.9475. Bids placed ahead of $1.9450 provided a cushion, the buying taking rate back through the overnight high and on to $1.9523. Reported offers placed between $1.9520/25 proved strong enough to contain, with rate sinking back to $1.9460. Cable settled around $1.9500 ahead of the NY open. Cable bids $1.9480/70, $1.9450. Offers $1.9520/40, $1.9550/60
USD/JPY: Opened in early Europe around Y104.54. European dealing opened with dollar-yen slipping to fresh lows for the day, stops going off under yesterday's NY low, with the base extended to Y104.16. A decent bounce saw rate coming back to Y104.70, with traders noting large expiry interest at Y104.75 for the NY cut possibly having an influence on the pair. Dlr-yen bids Y104.15/00, stops below, offers Y104.90/00, stops Y104.15

US data starts at 1230GMT, when US housing starts are expected to slow further to a 940,000 annual rate in April, as builders continued towrestle with the huge inventory overhang of unsold new homes. At 1355GMT, the Reuters/University of Michigan Consumer Sentiment Index is expected to fall to 62.0 in early May after a sharp decline in the previous month.

- Inflation is much too high, 3.0% plus is an unacceptable figure
- Q2 growth likely weaker than Q1 but no grounds for pessimism
- Supports a steady hand monetary policy and not a knee jerk one
- Current monetary policy stance is very suitable to maintain price stability and avoid inflation expectations building up

EUR/USD: $1.5300
USD/JPY: Y104.75, Y105.50, Y103.50, Y107.50
GBP/USD: $1.9600
AUS/USD: $0.9420, $0.9385, $0.9300
USD/CAD $0.9950, C$1.0005

The dollar snapped three days of gains against the euro before reports that may show U.S. housing starts fell to a 17-year low and consumer confidence slumped to the weakest in 26 years.
The U.S. currency pared its weekly advance versus the euro after European Central Bank policy makers signaled they are unlikely to cut interest rates that are double those in the U.S. The yen was set for its biggest weekly decline in a month versus the dollar and euro as Asian stock gains encouraged investors to increase holdings of higher-yielding assets funded in Japan.
Japan's currency was set for the steepest weekly loss since April 18 versus the Australian and New Zealand dollars as falling volatility boosted demand for so-called carry trades.
The current level of interest rates will help curb inflation, ECB council member Yves Mersch said late yesterday, signaling policy makers are in no rush to lower borrowing costs even as economic growth slows.
The ECB has avoided cuts in borrowing costs since last year, keeping its main refinancing rate at a more-than six-year high of 4 percent, to curb inflation. The Federal Reserve's benchmark rate is 2 percent.
Demand for the dollar weakened after the Federal Reserve reported yesterday a 0.7 percent decline in industrial production last month, following a revised 0.2 percent gain in March. The New York Fed's general economic index, a gauge of manufacturing, declined to minus 3.2 in May, from 0.6 the prior month. Readings below zero signal contraction.

Resistance 3: Y107.40Resistance 2: Y106.40
Resistance 1: Y105.40
Current price: Y104.77
Support 1: Y104.00

Support 2: Y103.40

Support 3: Y102.60

Comments: Dollar advances. The nearest resistance is trend line from Oct 2007 at Y105.40. Break above will rally dollar to Y106.40 and Y107.40.Support is near Y104.00, then – at Y103.40 with a break under will widen losses to Y102.60.

Resistance 3: Chf1.0730
Resistance 2: Chf1.0660
Resistance 1: Chf1.0600Current price: Chf1.0552

Support 1: Chf1.0500
Support 2: Chf1.0480

Support 3: Chf1.0400

Comments: Dollar rebounds after printi ng low at Chf1.0500. Under the support comes at Chf1.0480, stronger – on Chf1.0400. Back above Chf1.0600 will target Chf1.0660. Stronger level comes at Chf1.0730.

- Europe has 2-month lag for impact from US
- 'Europe will suffer from this slowdown'

Resistance 3: $1.9780
Resistance 2: $1.9600
Resistance 1: $1.9520
Current price: $1.9489
Support 1: $1.9400Support 2: $1.9360
Support 3: $1.9280Comments: Cable goes higher within a tight range. Resistance comes at recent high on $1.9520. Above there is a room for a rise up to $1.9600 and $1.9780. Support comes near yesterday’s lows on $1.9400. Break under will widen losses till $1.9360 and $1.9280.

Resistance 3:$1.5640
Resistance 2: $1.5600
Resistance 1: $1.5550
Current price: $1.5511

Support 1: $1.5420
Support 2: $1.5365
Support 3: $1.5280

Comments: Euro gains. Yesterday’s high on $1.5550 is quite a strong resistance. Above the rate may rise to May 6 high at $1.5590/00 and to the key level $1.5640 (50% of the resent fall from $1.6017 to $1.5280). Support comes at yesterday’s low on $1.5420. Further sales may widen till $1.5365 and Friday’s low on $1.5280.

GBP/USD backs off to $1.9500. Rate earlier traded to a high of $1.9523, but reported offers at the time between $1.9520/25 provided a cap. Talk now that this sell interest extends from to $1.9540, with stops mixed in above $1.9530.

EUR/USD: $1.5300
USD/JPY: Y105.50, Y103.50, Y107.50
GBP/USD: $1.9600
AUS/USD: $0.9385, $0.9300

EUR
Bids: $1.5470, $1.5450, $1.5420
Offers: $1.5500/05, $1.5520, $1.5550

JPY
Bids: Y104.20/00, Y104.10/00
Offers: Y104.90/105.00, Y105.40/50

GBP
Bids: $1.9480, $1.9465/50
Offers: $1.9520/40

AUSSIE
Bids: $0.9420/10
Offers: $0.9480

1.ECB has helped achieve economic stability
2.Euro area has seen impressive job creation
3.Euro area employment rates still modest
4.Inflation expectations have remained anchored
5.ECB monetary policy has been successful on price stability

The dollar declined against the euro, ending a three-day gain, on speculation U.S. reports today will show housing starts fell to a 17-year low and consumer confidence slumped to the weakest in 26 years.
The yen was set for its biggest weekly drop in a month to the dollar and euro as gains in Asian stocks encouraged investors to increase holdings of higher-yielding assets funded in Japan.
Demand for the dollar weakened after the Federal Reserve reported yesterday a 0.7% drop in industrial production last month, following a revised 0.2% gain in March.
The data diminished bets that the central bank will increase interest rates later this year. Futures on the Chicago Board of Trade show a 90% likelihood that the Fed will hold its target lending rate at 2% at its next meeting on June 25.

EUR/USD tested $1.5500 before rate retreated to $1.5482.
GBP/USD challenged $1.9455 lows before rose up to $1.9522. Later rate fell back to $1.9507.
USD/JPY declined from Y104.90 to Y104.26.

At 09:00 GMT EU trade balance is due to come. Meanwhile, today’s focus will be on US data, including housing starts and preliminary U Mich consumer confidence index. Analysts expect index rose to 64.0 from 62.6.

Japanese stock indices ended Friday's session narrowly mixed, but unable to hold onto early gains. The benchmark Nikkei 225 was lower by 32.26 points, or 0.23%, at 14219.48. The broader-based TOPIX ended 3.00 points higher at 1395.87.

Stock market fixing:
Nikkei 225 +133.19 +0.90% 14,251.74
Topix +19.83 +1.40% 1,392.87
FTSE +35.80 +0.58% 6,251.80
DAX -2.19 -0.03% 7,081.05
CAC +2.27 +0.04% 5,057.51
Dow +94.28 +0.73% 12,992.66
NASDAQ +37.03 +1.48% 2,533.73
S&P +14.91 +1.06% 1,423.57
10yr Note -0.9500 -0.241% 3.843%
NYMEX Crude Oil -0.10 -0.08% 124.12
Gold +13.40 +1.55% 879.90

Japan's stocks climbed to a four-month high after Sony Corp. forecast higher earnings, boosting confidence companies relying on overseas markets are becoming less vulnerable to exchange rates.
Sony, which gets a quarter of its sales from the U.S., leapt the most in seven months, while NEC Electronics Corp. soared the most in almost a year. Steelmakers rose on a report Toyota Motor Corp. agreed to a price increase for the alloy.
Sony soared 8.7%, the sharpest jump since Oct. 26. Operating profit is expected to rise by a fifth this fiscal year, the company said, while its game-console unit will post its first profit in three years.
NEC Electronics leapt 14%, the most since July 11.
Nippon Steel Corp. climbed 7%, the most in two months, on speculation it will pass on rising raw-material costs by raising prices.
Kawasaki Kisen Kaisha Ltd. surged 5.8%, while market leader Nippon Yusen K.K. gained 1.5%.

EU stocks rose after report showed European economic growth accelerated more in the first quarter than economists estimated as the strongest German expansion in 12 years powered the euro region through the global slowdown. Gross domestic product in the 15 euro countries increased 0.7% from the fourth quarter, the European Union's statistics office in Luxembourg said today.
French media group Vivendi reported forecast-beating results, in spite of a drop in first-quarter profits due in part to the weak dollar. Its shares climbed 5.2%.
In France, ArcelorMittal lost 0.1% and steel tube maker Vallourec dropped 0.2% after strong gains earlier this week.
In France, Credit Agricole sank a further 1.3% bringing its losses for the week to 8.6%.
The bank announced a €5bn asset sale on Thursday as well as a €5.9bn rights issue earlier this week. Societe Generale and BNP Paribas also fell, sliding 0.4% and 0.3% respectively.

Stocks rose Thursday as investors considered rising oil and gas prices, a weaker reading on manufacturing and a rash of deal news and rumors.
Jobless claims. The number of Americans filing new claims for unemployment rose 6,000 last week to 371,000, just topping forecasts for a rise to 370,000.
Manufacturing. The NY Empire State index, a regional read on manufacturing, came in at minus 3.2, versus forecasts for a flat reading. Any negative reading indicates weakness in the sector.
Yahoo under pressure. Activist shareholder Carl Icahn is launching a campaign against the Internet company's board of directors so as to restart deal talk with would-be buyout partner Microsoft. Yahoo (YHOO, Fortune 500).
CBS buying CNet. The broadcaster is buying the Internet company for $1.8 billion in cash, in a deal that will make CBS one of the top 10 web companies in the U.S. CBS (CBS, Fortune 500). CNet (CNET).
GE could sell appliance division. The conglomerate has reportedly hired Goldman Sachs to seek buyers for the sale of its business, which could be worth between $5 billion and $8 billion. GE

The dollar fell against the yen and the euro as reports showed U.S. industrial production dropped in April more than twice as much as forecast and New York manufacturing unexpectedly contracted this month.
The currency has traded in a range of $1.53 to $1.56 per euro this month as Federal Reserve policy makers cited the risk of inflation while the U.S. economy showed signs of weakness. Canada's dollar rose to near the strongest level versus the greenback since March as crude oil prices surged.
Consumer prices rose 3.9 percent in April from a year earlier, compared with an average rate of 2.7 percent over the past decade, a Commerce Department report showed yesterday. Cleveland Fed President Sandra Pianalto said on May 13 that prices are rising ``somewhat faster than I would prefer.''
The dollar weakened versus the yen and the euro as the Fed reported a 0.7 percent decrease in production at U.S. factories, mines and utilities last month, following a revised 0.2 percent gain in March. The New York Fed's general economic index, a gauge of manufacturing, declined to minus 3.2 in May, from 0.6 the prior month. Readings below zero signal contraction.
The U.S. currency pared its loss against the euro as the Philadelphia Fed reported its index of manufacturing registered at minus 15.6 in May, compared with minus 19 forecast by economists. A negative number indicates contraction.
The euro strengthened earlier as a report showed Europe's economy grew more than forecast in the first quarter, increasing the likelihood the European Central Bank will hold interest rates at a six-year high.

EUR/USD rose from $1.5487 to $1.5547 in the wake of strong releases from Germany. Later rate retreated to $1.5490 and, triggering some stops, it reached $1.5417.
GBP/USD strengthened from $1.9465 to $1.9501 before sliding to $1.9450 and later – to $1.9400.
USD/JPY fell from Y104.91 to Y104.50/40 amid dollar’s weakness. Later rate could rise above Y105.00.

At 09:00 GMT EU trade balance is due to come. Meanwhile, today’s focus will be on US data, including housing starts and preliminary U Mich consumer confidence index. Analysts expect index rose to 64.0 from 62.6.

Resistance 3: Y107.40
Resistance 2: Y106.40
Resistance 1: Y105.40
Current price: Y104.39
Support 1: Y104.00
Support 2: Y103.40
Support 3: Y102.60
Comments: Dollar retreats. Support is near Y104.00, then – at Y103.40 with a break under will widen losses to Y102.60. The nearest resistance is trend line from Oct 2007 at Y105.40. Break above will rally dollar to Y106.40 and Y107.40.

Resistance 3: Chf1.0730
Resistance 2: Chf1.0660
Resistance 1: Chf1.0600
Current price: Chf1.0554
Support 1: Chf1.0520
Support 2: Chf1.0480
Support 3: Chf1.0400
Comments: Dollar slides with support is around Chf1.0520. Under the support comes at Chf1.0480, stronger – on Chf1.0400. Back above Chf1.0600 will target Chf1.0660. Stronger level comes at Chf1.0730.

Resistance 3: $1.9780
Resistance 2: $1.9600
Resistance 1: $1.9500
Current price: $1.9474
Support 1: $1.9400
Support 2: $1.9360
Support 3: $1.9280
Comments: Cable consolidates. Resistance comes at recent high on $1.9500. Above there is a room for a rise up to $1.9600 and $1.9780. Support comes near yesterday’s lows on $1.9400. Break under will widen losses till $1.9360 and $1.9280.

Resistance 3:$1.5640
Resistance 2: $1.5600
Resistance 1: $1.5550
Current price: $1.5480
Support 1: $1.5420
Support 2: $1.5365
Support 3: $1.5280
Comments: Euro failed to rebound. Yesterday’s high on $1.5550 is quite a strong resistance. Above the rate may rise to May 6 high at $1.5590/00 and to the key level $1.5640 (50% of the resent fall from $1.6017 to $1.5280). Support comes at yesterday’s low on $1.5420. Further sales may widen till $1.5365 and Friday’s low on $1.5280.

High Low Close
EUR/USD 1.5545 1.5418 1.5442
USD/JPY 105.27 104.42 104.67
GBP/USD 1.9500 1.9403 1.9478
USD/CHF 1.0592 1.0483 1.0564

EUR/JPY 162.92 161.57 161.55
EUR/GBP 0.7985 0.7923 0.7925
GBP/JPY 204.81 203.09 203.91
GBP/CHF 2.0591 2.0403 2.0578

Change % Change Last
Nikkei 225 +133.19 +0.90% 14,251.74
Topix +19.83 +1.40% 1,392.87
FTSE +35.80 +0.58% 6,251.80
DAX -2.19 -0.03% 7,081.05
CAC +2.27 +0.04% 5,057.51
Dow +94.28 +0.73% 12,992.66
NASDAQ +37.03 +1.48% 2,533.73
S&P +14.91 +1.06% 1,423.57
10yr Note -0.9500 -0.241% 3.843%
NYMEX Crude Oil -0.10 -0.08% 124.12
Gold +13.40 +1.55% 879.90

04:30 Japan Industrial output (March) final -3.1% -3.1%
04:30 Japan Industrial output (March) final Y/Y -0.4% -0.4%
09:00 EU(15) Trade balance (March) unadjusted, bln - 0.8
12:30 USA Housing starts (April), mln 0.940 0.947
12:30 USA Building permits (April), mln 0.910 0.927
14:00 USA Michigan sentiment index (May) preliminary 64.0 62.6