The National Association of Realtors (NAR) is the largest trade organization in the country. With more than 1.1 million members, the NAR is a powerful group.  This powerful group of brokers and their agents performs transactions in a market segment that may well determine the length of the recession and the strength of the recovery.

Like many segments of the U.S. economy, this association bears a burden.  Unfortunately when the country’s property owners need straightforward, reliable information, the NAR has chosen to straddle the fence.  Perhaps, the NAR has elected this course to protect its own who have sold residences and buildings that no longer sustain their values or perhaps the NAR is straddling the fence under the guise of assisting a recovery, but either way, the NAR is, in fact, delaying the recovery.

Euro volatility looks likely in the coming session as the European Central Bank issues a highly contested interest rate decision. The central bank is facing mounting pressure to provide greater monetary stimulus, with the Paris-based Organization for Economic Cooperation and Development (OECD) urging the central bank to cut borrowing costs toward zero and keep them there into 2010 while Credit Suisse’s overnight index swap index reveals traders are now pricing in a 59.9% chance of a 25 basis rate cut, a sharp reversal considering they were reflecting a 62.7% chance of a rate hike just a week ago.

ADP Employment – US private sector companies continued to shed jobs in the month of June as the ADP employment report showed another decline of 473,000 jobs lost in the month. Although better when compared to the almost 700,000 average lost in the first quarter, the report results continued to be released to the downside of expectations. For the month, estimates were for a shortfall of 400,000. As a result, today’s release will likely push positive expectations of tomorrow’s Labor Department report, with expectations leaning on a 325,000 job shedding in the month of June and a subsequent increase in unemployment to 9.6 percent.

German Retail Sales are expected to come to a standstill in May with annualized receipts falling for the fourth consecutive month, this time by -1.5%. Deepening turmoil in the labor market has weighed on disposable incomes, trimming spending and encouraging precautionary saving. Indeed, the unemployment rate rose to 8.3% in June, the highest in 16 months, and is expected to average around 10% through the end of 2010 according to the International Monetary Fund. Consumption is the largest contributor to overall economic growth, meaning the chance of a substantive recovery in GDP growth is unlikely in the months ahead, both for the Euro Zone’s largest economy and the currency bloc as a whole. The prospect of deepening recession and an increasingly credible deflationary threat have boosted expectations that the European Central Bank will cut interest rates later this week, with overnight index swaps suggesting the market now sees a 59.9% chance of a 25 basis point reduction.

New York State Attorney General Andrew Cuomo, son of former Governor Mario Cuomo, won a stunning decision when Supreme Court Justice Antonin Scalia delivered the deciding vote in a 5-4 decision that allows states to enforce their consumer protection laws against federally chartered banks.  In a surprise move by the High Court’s most conservative member, Justice Scalia joined the Court’s four most liberal members in support of the decision overturning along standing OCC regulation.

The final revision of UK Gross Domestic Product is expected to reveal the economy shrank -2.1% through the first quarter, a greater contraction than the originally-reported -1.9% decline. In annual terms, GDP is expected to have shrunk at a pace of -4.3%, the fastest in at least 53 years. The most recent GDP forecast from NIESR, a think tank, suggested the turmoil may slow in the second quarter of the year, predicting that March was “the trough of the depression, with output rising in April and May.” A validation of such an outlook in the forthcoming data would surely lift a great deal of pressure from the shoulders of policymakers who have effectively exhausted most stimulus options. Indeed, the government is unlikely to offer much more of a boost with the fiscal gap expected to reach a whopping 14% of GDP by next year, while the central bank has already slashed rates to a meager 0.5% and embarked on quantitative easing. On balance, consensus economic growth forecasts suggest that the UK will trail behind the US but outpace the Euro Zone through the end of 2010, suggesting the Bank of England will follow the Fed but lead the ECB in lifting interest rates as the recovery takes hold. All told, this points to a bearish bias for both GBPUSD and EURGBP in the months ahead.

Euro Zone Economic Confidence figures are expected to tick up in June, though as we have noted previously, some recovery in sentiment is to be expected as governments’ fiscal efforts filter into the broad economy; the big question at this stage is whether growth is sustainable after stimulus cash dries up. This suggests the Euro is likely to look past the data docket with near-term price action taking directional cues from trends in risk appetite, with EURJPY and EURUSD still 83% and 88% correlated with the MSCI World Stock Index, respectively.

FX traders will be eyeing the world’s largest economy this week, along with additional data from G-8 countries, as the US unemployment number will once again be the talk of the town. Adding to some near term activity will also be the fact of a shortened trading week in the US as a bank holiday is observed. Nonetheless, here we are once again with expectations looking for hope of stabilization in the domestic labor market.

US Non-Farm Payrolls Report

In its Thursday report, the U.S. Commerce Department announced a slight improvement in the Gross Domestic Product report for the first quarter 2009.  Original indications were that the GDP has contracted at an annual rate of 6.1%.  That report was lowered to 5.7% and on Thursday was reduced further to 5.5%.  Projections call for a mild decline in the second quarter 2009.

Gary Thayer of Wells Fargo Advisors in St. Louis reported, “The economic data we’ve seen so far for the second quarter suggest the preliminary number for the second quarter will show a modest decline, maybe half the rate we saw in the first quarter.”