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

Selling pressure continued to keep the NZDJPY cross lower for the third prospective session as consolidation remains imminent after such a drawdown.  Breaking lower through the 72.00 figure, the cross currency pair dip was attributed to a stronger yen bias following promising economic reports from the worlds second largest economy and further Chinese yuan revaluation speculation.  For the record, industrial production and housing data remained promising while Chinese yuan non-deliverable forward contract action saw the price flirt with record lows once again.  Both added strength to an already favored major currency leg, propelling cross action in favor of the yen.  However, with the weeks momentum looking a little thin, a retracement is likely in the crosses as formidable bidding is rumored at the 114 in the Japanese major.  Taking a look ahead, the schedule offers little for further upside momentum at this point.  However, with the Kiwi falling out of favor in recent days, the probability of further downside looks to be steadily increasing.

GBPUSD

Dollar weakness purported the move higher in the pound during the North American session, boosting it to one of the top three spots for movers on the day.  Stemming from last week, dollar bearishness looks to increase as further suggestions are expected of a slowdown in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US economy with the interest rate differential narrowing on higher prospects of an MPC move.  With the housing sector rebounded and a stabilization in activity, central bankers are now focusing their attention back to inflationary pressures.  This notion will likely purport a hawkish bias heading into the second half of the year.  For the record, the short sterling curve has already begun to price in a 25 basis point rate hike by the third quarter of this year.  Additionally, economic data was in favor of the sentiment as traders and the market witnessed higher than expected money supply figures, suggestive of rising inflationary pressures, and increasing mortgage approvals.  Surprisingly, money supply continued the uptrend seen in the past couple of months as M4 money supply jumped 13.5 percent in the month.  Tomorrows data will offer further insight in the UK economy and coincide with the USs ISM report.   Expected for tomorrow will be little change in the UK manufacturing PMI survey.

Reaching a top, the sterling major looks overtextended on a 240-minute snapshot with plenty of offers emerging near the session high of 1.8700.  Should stops hold, capping further gains, this would likely lead for a test of the 1.8500 figure which coincides with the 38.2 percent fib level from the bi-weekly bull wave.  Likely to hold, the 1.8432 figure would serve as the next line of defense given the 50 percent support.

EURAUD

Light positioning ahead of the Reserve Bank of Australia meeting this week boosted the currency cross pair even as the Euro  major legs gains were widely capped on an option barrier defense.  In the Euro major, resistance was key ahead of the 1.2775 option barrier as offers from Asian, US and UK names were heard selling into strength.  Subsequently, the barrier capped gains made earlier in the morning even as Chicago regional manufacturing rose on the month, boosting the EURUSD pair higher.  For the month of June the report improved to a 57.9 from a 56.5 print, suggestive of at least some near term strength for the dollar.  As a result, traders and the market will continue to focus on the upcoming ISM data in order to properly gauge the economy and thus an imminent decision by Federal Reserve Policy makers next week.  With the Reserve Bank of Australias 6 percent rate decision already priced into the market, traders are now siding with further rate hikes in narrowing the interest differential spread between the two economies, Euro zone and Australia.  Next up for both components of the pair will be unemployment figure for the Euro zone while traders await the central bank decision in Australia in two days time.

Consolidating as we head into the Asian session, some light bidding is keeping the pair afloat as profit taking has taken the cross back a bit since this morning.  Bound by the current ranging environment, downside is preferable in the short term as the price action leans to a retest of the 1.6600 bottom support on the 60-minute perspective.