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Prospects rose for further Euro appreciation against a seemingly weakening Aussie as economic data led to suggestions of a near term slowdown.  Released in the overnight, traders saw building approvals decline by a whopping 12.6 percent.  More than four times the consensus figure, the report is a complete reversal of the 8.3 percent rise witnessed last month.  With building approvals lower, sentiment is siding with a potential downturn in what was healthy residential construction activity.  Subsequently, consumer sentiment is likely to have been adversely effected and will likely trickle negative reactions in spending in the coming quarter.  Additionally lower, and bearish for the underlying currency, was the retail sales figure.  For the month of August, retail sales rose 0.3 percent, higher than the 0.2 percent expected by the consensus.  Although positive, the figure is the second consecutive decline in the overall report.  With a seeming downtrend, expectations are surfacing of a slowdown in the economy, thinning out the possibility of a rate hike by the Reserve Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Australia even as inflation continues to loom over the economy.

Rising through key technical levels at the 1.7100 handle, the days gains look likely to pull back, as they always do, in the Asian session.  Confirming the notion looks to be a death cross forming in the Stochastic oscillator.  As a result, bears will likely be eyeing 1.7067 (23.6 percent fib level from the 9/26-10/3) on the 60-minute time frame with likely capping to come further below at the 1.7000.   However, as always, should the bullish onslaught continue, taking out the session top, bulls would likely be focusing on the 1.7200 figure (remaining well above the 1.7098 R1 resistance).

AUDUSD

The Australian dollar major suffered on the day, topping the second spot in our top three market movers in the New York session.  Following the dour data released in the morning hours, traders began paring back long positions, initiated at the beginning of the week on a follow through of bullishness seen in previous weeks.  However, with retail sales lower and housing sector losses emerging, central bankers will likely keep rates at the current 6 percent to avoid exacerbation of inflationary pressures in the near term.   However, this does not preclude a decision in the longer term, ie end of the quarter, as traders will likely look to further data in attempting another momentous push.  Next up for Aussie traders will be the AiG Performance of Service Index, which is expected to remain just above the expansionary minimum.

Steadily declining, the Aussie major has seemingly found consolidation at the 0.7425 support figure, well above the 0.7526 (R1 Weekly pivot) which previously held the underlying major at the beginning of the week.  Now, somewhat overextended, the underlying currency looks ripe for a bounce heading into the Asian session.  Confirming the notion is the golden cross forming in the Stochastic oscillator.  Should bids emerge at this level, bulls will be eyeing the 0.7440 near term resistance as the first barrier before a test of the 0.7480 figure.  Momentum is likely to be capped at this level with sellers likely to surface.  However, should bearish momentum win out on the 60-minute, sellers will likely shoot for the July 19^th low of 0.7403.

AUDNZD

Noted on a comeback in recent sessions, the AUDNZD is currently testing to the downside on comparative data from the commodity bloc region.  Against Aussie retail sales and building approvals that were to the downside, New Zealand commodity prices continued to skyrocket.  According to the ANZ commodity prices report, prices in the Kiwi economy doubled that of the previous month, rising by 0.8 percent.  The August figure was subsequently revised higher to 0.5 percent and sets the stage for further speculation that Reserve Bank of New Zealand central bankers will heavily consider rate hikes once again before year end.  Although economic fundamentals havent been as impressive, notably the widening trade deficit that is now 9.3 percent of overall GDP, the interest rate offered continues to be the highest of the industrialized nations.  This notion alone is making the underlying currency pair a perfect candidate for carry traders looking to take advantage of the wider spread.  The bid tone fed into the AUDNZD which fell on the day to round out our top three market movers.

Technically speaking, the underlying cross is hovering a major support figure at 1.1258 (S1Weekly Support).  This is the support figure that is keeping the underlying cross in range bound potential, with plenty of upside likely in the overnight.  Bolstering the notion in the 60-minute is the uptrending golden cross visible in Stochastic with bullish traders eyeing the 1.1300 figure as the first level of resistance.  Although significant, capping of any upward momentum will come in the form of the 1.1350 figure.  Should the level fail to hold, eyes will be focused on the 1.1450 prospect.  Any breakdowns at the current price would see a downward test of the 1.1216.