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AUDUSD<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Aussie DeficitNarrows, Lead Spot Lower

Aussie selling roiled the market even after trade data was released in favor or Aussie longs.  Narrowing to A$1.09 billion, the trade gap was lessened on increased demand from China and Japan that benefited miners and raw material producers.  The figure is less than the A$1.51 billion seen in the previous month and looked to shed a positive light on the region, coupled with an early morning quarterly report by the Peoples Bank of China on a more flexible allowance on the domestic currency.  However, a major Australian investment house looked to have sparked the selloff with additional sellers keeping the currency pair bottom heavy.  Subsequent pressures was applied as both copper and gold contracts declined throughout the NY hours triggering major stops on the way down.  Crosses didnt help to make it better as notable selling also existed in the AUDCHF and AUDNZD crosses.

Rumormill

Bids to buy back on a pull surround the 0.7500 figure with further interest slightly above.  Stops cover the bottomside should positions be initiated.  Offers continue to place pressure above at key ceilings at 0.7620 and 0.7650.

Technically Speaking

Bearish momentum looks to take the current consolidation lower following a textbook double top that sparked wayward selling during the North American hours, breaking the final line of support at 0.7535 (60 percent fib from the bull wave).With 0.7500 providing formidable support, Stochastic is confirming the previous notion as the oscillator remains overextended. 

GBP/USD

Sterling Data Fails To Inspire

Sterling positions followed in line with Aussie selling to the downside as economic data proved lacking in the United Kingdom.  All data was soft including the Nationwide report with the lone exception being an optimistic CBI sales report. Countering, dollar data was positive and inflationary suggestions were sparked following FOMC minutes adding to already weighted portfolio realignment pressure on the sterling major.  Futures contracts are now pricing in a notable 75 percent chance of a June rate hike as Federal Reserve officials remain vigilant of rising consumer prices and expansive economic data.  With no real pertinent data for the pound to rally on, traders look to expect a play on the unemployment figures with preceding reports already casting a dollar bearish bias.

Rumormill

Bids look to take advantage on the 1.8700 figure as countering selling look to keep the tight range heading into the Asian session.  Offers look to be taken on the upside of 1.8760.

Technically Speaking

As mentioned in yesterdays report, the pullback looked probable following the rise in New York on Tuesday.  Breaking through the 1.8716, the underlying currency looks stable at the current 1.8697 price, resting comfortably on the hourly Fibonacci of 61.8 percent..  With oscillators looking overextended, a bounce coincides with the current floor and a move back to the previous support of 1.8760 imminent.  Should the floor break, traders look to eye the last defense at 1.8545.

NZDUSD

Month End Re-Weighting Drives Kiwi

Kiwi selling looked mostly attributed to end of the month re-weighting as the commodity bloc currency fell in time with the Australian denomination despite strong bids on the AUDNZD cross.  Exacerbating the move was speculation of a 50 basis point rate hike following US Federal Reserve minutes that indicated rather hawkish language, although additionally citing the possibility of a rate stay.  Offers remain heavy on the pair as we head into the Asian session with re-establishments at 0.6420 and below at 0.6350.