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

The cross reversed downward momentum witnessed over the past couple of sessions as the Japanese yen major leg was subject to profit taking.  Additionally, the Kiwi was bid higher on the session following a lackluster Fed beige book reading that cast further doubt on the probability of further rate tightening attempts in the worlds largest economy.  According to the report, sections of the economy experienced a slowdown in overall growth as residential demand slackened.  The two reasons combined, made for a perfect bid session for the carry candidate as bulls recaptured the overall uptrend during the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session.

Looking ahead traders will be focused on tomorrows Japanese leading economic index survey as it precedes the Bank of Japan decision on Friday.  Expected to decline from the previous up tick seen in the month of June, the preliminary figure may add to further yen bearish, supporting a move higher in the Kiwi leg.  On the flip side Kiwi data is running thin with no other surveys expected for the week.

Stopping on a dime, the downtrend that has unfolded over the past two sessions came to an abrupt halt as sellers met undeniable bidding at the 74.50 figure (38.2 percent fib level from the 7/31-8/31 bull wave).  This purported a breach of Fridays close at 75.50 as the price action continues to consolidate above the figure.  Further momentum is likely to pickup as we head into the overnight, making the current 75.75 resistance ceiling questionable.  A break above would purport a bull run to the 76.24 figure (August 30^th spike high) with higher aspirations of a retest at the 76.50 figure.  However, should sellers emerge premature to the 75.81, a downward retest of 75.13 is probable.

AUDNZD

Sellers re-emerged in the AUDNZD cross pair as the Reserve Bank of Australia was forced to keep rates at the current 6 percent standing.  Although relatively priced in to the ultimate decision, the market was surprised to see the overall growth was the culprit to the no change decision.  According to the Australian Bureau of Statistics, overall gross domestic product in the economy slowed to a 0.3 percent pace in the second quarter.  The data pales in comparison to the 0.7 percent uptick expected by the consensus and brings the annualized comparison down to a 1.9 percent rate compared to earlier forecasts calling for 2.6 percent.  As a result, the market seems to have shifted gears and is now considering the possibility that Governor Ian McFarlane is likely to keep rates as they are for the remainder of the year even as inflationary pressures loom heavy above the economy.

Any support for the Australian dollar will likely have to come from the upcoming Cash card retail index report and employment figures for the Aussie economy.  Should reports continue to indicate a tight labor market and sustained consumer interest, optimism may be boosted in the likelihood of a decision in the fourth quarter.  The unemployment rate is expected to remain unchanged at 4.8 percent with continued additions to the employment change survey.

Following through on a textbook double top in the 60-minute chart, current price action is suggestive of further downside in the cross pair should the 1.1822 figure fail to hold (38.2 percent fib level from the two day bull wave).  Subsequently, bidders are looking thin till the 1.1650 figure on a break.  Upside potential, however, cannot be precluded as profit taking in the Asian session is likely to boost the pair in the short term.  First round barriers are positioned at the 1.1822 with a break above making the 1.1875 (23.6 percent fib level from the aforementioned level) figure the next stop on a continued bull run.

AUDCAD

Canadian strength was attributed to the widely disappointing Australian quarterly gross domestic product figure even as the Bank of Canada decided to keep the current overnight benchmark rate at 4.25 percent.  With inflationary pressures abating and overall economic growth pulling back slightly, the decision was already priced into the market, keeping the Canadian dollar bid.  The sessions gains were also in light of a continued pullback in crude oil contracts.  Still below the $69 a barrel figure, further downside is anticipated should the current support figure fail.  Next up for the Canadian dollar traders will be the IVEY purchasing managers index survey.  Although likely to continuing hovering around the previous months 60.1 figure, expectations are for a mild pickup in manufacturer spending.

A textbook head and shoulders formation lent bears clear leverage on the day as the price action halted after testing the support floor of 0.8448 (61.8 percent fib from the 8/25-9/5 bull wave).  Bidders emerged strong along with short sell profit taking to turn the underlying cross on a spike low of 0.8444.  Upside momentum may be short lived, however, as fresh offers are likely to be taken at the 0.8473 figure with further selling above right below the 0.8500 handle.  However, should pressure build for a break of support at the 0.8450, bears are likely to have their way with the Aussie.