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Fueled by Australian dollar bullishness, the AUDCAD currency cross was higher in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session following a Reserve Bank of Australia decision that kept interest rates at the current 6 percent.  Although no subsequent statement was released following the no change decision, sentiment remains perched on previous statements by former Governor Ian McFarlane.  Prior to his retirement last month, McFarlane continued to reaffirm the market that rate hikes could not be precluded at this moment as inflationary pressures continue to loom on rising global pressures.  Of note, however, was the fact that the RBA now has a new governor in office, Glenn Stevens.  At this point, the newly elected Stevens and subsequent policy makers are likely to sit on their hands in order to view the effects of the past two rate hikes before making any further commitments on the rates direction.  

Additionally supporting the move higher in the cross was a decline in commodities overall.  With crude oil contracts trading below the benchmark $60 a barrel mark, traders are wary of any long CAD positions as rate hikes and economic expansion prospects are continually declining.

Approaching topside resistance, the AUDCAD cross seems ripe for a pullback.  Should momentum weaken, the downward momentum may well be sparked by heavy stop losses below the 0.8400, purporting a potential move lower as bears eye 0.8367 (38.2 percent fib level from the 9/29-10/4 bull move) as the first barrier of support on the 60-minute.  Stochastic is confirming the move lower as a suggestive death cross forms above overbought extension.

NZDUSD

Plenty of dollar weakness in data spurred on higher bids in the NZDUSD.  For the month of September factory orders were released unchanged while ISM non-manufacturing figures were far lower than expected.  Although optimistic, the unchanged factory orders figure still purports a slowdown in the worlds largest economy as it compliments the previous monthly decline of 1 percent.  However, garnering a fair share of the days focus was the ADP employment report.   Sometimes referred to as a precursor to the months Nonfarm payroll report, the ADP survey came in far below expectations of an addition of 115k.  For the month, ADP reported an increase of only 78k, sparking concern that this Fridays figure will be far lower than the 120K that is expected by the market.  Going forward it also has the likelihood of damaging the upcoming retail sales figure, which was expected to give the dollar a little bit of a lift.  All in all, carry traders and momentum funds bid up the Kiwi on dollar weakness as it grows increasingly definite that rates are not expected to rise any time soon as the economy takes a softer slowdown.

Bullish for the Asian session, bids are still apparent in the NZDUSD major as the market continues to trade near the 0.6646 session high.  Should momentum fail bears are likely to pounce on the Kiwi, focusing on a pullback to the 0.6609 (23.6 percent fib from 9/29-10/4 bull move) with definitive capping not seen until 0.6567.  However, with the bias to the upside, tops are looking heavy at the 0.6668 figure (R1 Weekly Pivot) where plenty of sellers are likely to add pressure.

NZDJPY

Carry traders boosted the NZDJPY cross during the New York session as traders looked for higher yielding bonds only offered through the Kiwi economy.  Currently, the New Zealand dollar offers the highest carry of all the industrialized nations at 7.25 percent.  Compared against Japanese yen based assets, the spread is mighty attractive as the investor is likely to reap 700 basis points on a carry position.  As a result, the word uridashi could be heard in the market as Kiwi based bonds were soaked up and FX markets saw further bidding in the New Zealand dollar.

Technically, the NZDJPY looks ripe for further long initiatives as price action has broken through a textbook flag formation, lending to further upside.  Although a pullback is expected, further bids are likely to carry the cross higher.  For now bears will likely be eyeing the 77.67 figure (38.2 percent fib level from the 9/29-10/4 bull wave) with bids likely emerging on the pullback.  Conversely, should momentum maintain its direction, bulls should make easy work of the 78.60 figure on the way higher to 78.70.