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Euro enthusiasm ran strong against the Canadian dollar as technically driven trading took the pair lower through the session.  Topping our list of movers on the day, the cross pair was hammered down by 0.6 percent at the close, sporting 138 basis points to the downside.  The dip was witnessed in spite of a better than expected Swiss manufacturing survey and Eurozone producer prices that continued to be heightened.  Fundamentally speaking, the dip was bolstered by whisper speculation of a possible dovish decision by the European Central Bank, which is set for tomorrow morning. 

At this point, with the market already pricing in a move to 3 percent, any decision to stand pat or subsequent softer comments look to be very unwelcomed in the current tightening cycle.  This notion would leave the cross susceptible to carry bids as the Canadian economy continues to sport a higher interest rate than the Euro zone economy.  Technically, plenty of selling pressure emerged as the cross pair approached the anticipated 1.4500 figure.  Hitting the level, the current uptrend failed to break higher leaving orders to be filled to the short side of the book.   However, with the central bank decision tomorrow, another test may yet be on the way.

AUDNZD

The Australian dollar became the session favorite following the Reserve Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Australias decision to raise rates by another 25 basis points to 6 percent.  Closing in on the Kiwi economys benchmark rate, further optimism was spurred as retail sales, a key fundamental report, rose by a whopping 1 percent in the month.  The decision comes as no surprise as the market had already anticipated the decision.  However, the majors boost came from further hawkish comments by the central bank and the encouraging sales figures as both increased the likelihood of another 25 basis point rate hike within the next 4 months.  

Currently, futures traders are pricing in the probability of such an event by an astounding 85 percent.  As a result, there still seems to be plenty of room for the Aussie major at this point, which will in turn boost cross demand, giving plenty of impetus for another move lower.  However as before, further weakness in manufacturing may spell temporary disaster for the current momentum should the sector continue to fade.

AUDCAD

Surprisingly, the Australian dollar was placed under pressure, regardless of the rise in interest rates to 6 percent during the New York session today.  Bearing responsibility is the notion that growth is slowing in the worlds largest economy following softer figures for the month.  The concern continues to lie with the upcoming employment report in the US which is expected to fall within or below consensus figures, prompting the Federal Reserve in heavily considering a halt in the current tightening cycle.  The central bank next meets on August 8^th to decide the fate of benchmark rates.  This notion has sparked sentiment of a global slowdown, pushing investors to seek out hard tangible commodities in saving the value of their currency, boosting the Canadian denomination.  In addition, todays support of crude oil contracts has lent to overriding bullishness as well.  Although the relationship between the commodity and underlying spot price has faded in recent months, no one can deny the positive effects of crude oil at these levels.

Technically speaking, the sessions move also proved to be a product of technically driven trades as profit taking continued on the three day runup on a failure of the test at 0.8700.  Although longer term upside potential still remains on a break of the longer daily time frame resistance, a pull back in the intermediate term cannot be ruled out.  Next level of support floors looks to be concentrated around the 0.8560 figure with heavier considerations at 0.8475.