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Momentum from yesterdays reports reverberated on the session with the AUDNZD currency cross pair dropping another 0.7 percent on the session.  Amounting to 165 basis points, the commodity cross pair continued to the downside as second quarter manufacturing activity vaulted almost 5 times above the previously printed figures.  Increasing in the prior print at an annualized pace of 1 percent, the second quarter rose at a 4.9 percent pace.  Subsequently, the previous 1 percent figure was revised higher to 1.3 percent. Reflective of higher demand the figure additionally coincides with previous retail sales figures that have risen above the consensus estimates for the past two months.  Yesterday, the market saw retail sales figures that dominated over the consensus, rising at a 1.3 percent pace as well.  Confirming the overall pickup in consumer demand, sentiment is now mounting full speed ahead of further growth in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Pacific Rim economy.  The notion is likely to convince Reserve Bank of New Zealand Governor Allan Bollard that further rate hikes need to be considered as inflationary pressures are likely to make their way higher.  All in all, more Kiwi bullishness.

Consolidating off of the sessins move, the underlying currency is likely to make another retest of the broken trendline support, which now stands are resistance just below the 1.1350 figure.  A close above here would purport further momentum on Sundays open, as the bulls eye for a move to just below the 1.1375 figure.  Resistance would further stand above at the 1.1400 figure.  Both MACD and Stochastic are confirming the upside potential as the oscillators show a bullish divergence and golden cross respectively on the 60-minute shot.  Nonetheless, this does not preclude further downside should the current session low be broken.

NZDJPY

Another cross to benefit from yesterdays momentum, the NZDJPY cross moved higher in the overnight to take the second spot in our list of the top three market movers.  Rising 0.6 percent, further carry traders entered on long positions as Japanese economy data was slightly more pessimistic compared to higher manufacturing figures in the Pacific economy.  In Japan the coincident index was printed lower than expected at the 75 percent mark with the leading economic index surprising market participants, falling to a 27.3.  Far below the 57.8 expected by the markets, the final figure looks to be reflective of the less than expected industrial production and retail sales figures that have recently been released.  However, preceding the reports was the below consensus tertiary industry index.  For the month of July, the index declined for the second month by 0.2 percent.  Expected to have remained unchanged, the previous month number was revised lower and paints a rather ugly picture for the economy.  As a result, the potential for rate hikes in the near term remains in jeopardy, lending to widespread yen weakness.  The notion is, conversely, a boon for the Kiwi counter as the economy continues to offer an interest rate advantage against the Japanese currency.

EURUSD

It was a battle of the disappointing industrial production reports as both European and US reports were released early in the North American session.  In the end, the US IP figure won on a rather tepid victory, declining by 0.1 percent.  On the European side, Swiss industrial production actually rose far less than consensus expectations.  Estimated to have risen 6.9 percent in the second quarter, the report fell short, only rising by 3.4 percent.  Although following a 1.9 percent decline, the incremental improved was not well received by currency participants.  The effects spilled over into the Euro major as consumer prices rose in line with earlier estimates.  Core figures increased by 1.3 percent as the annualized comparison for August rose 2.3 percent.  Nonetheless, the lower than expected production figures are sending bearish signals, that rates may not rise as fast as the market is anticipating as growth moves at a sluggish pace.

Dollar data was additionally encouraging, set aside the disappointing IP figures in the monrning.  Manufacturing activity in the New York region ticked higher than expected and continues the short term uptrend lending some positive bias that growth may not be slowing as sharply as some anticipated.  Consumer prices were also in line with expectations as consumer confidence according to the University of Michigan survey increased slightly higher than expected, posting an 84.4 compared to an 84 figure expected by the consensus, lending to dollar bullishness.