Click here for PDF version
NZDUSD
Kiwi dollar was boosted in the New York session as traders continued to pare back positions in the AUDNZD cross pair. Already subject to mass Aussie liquidation over the past seven sessions, cross selling positively affected the NZDUSD major as traders continue to take the other side of the once touted winner. In addition, carry candidate NZDJPY demand supported the major with traders looking to continue the 700 basis point advantage against the Asian currency.
Momentum in the North American session was lighter than the overnight as the pair was unable to capture the London session highs. Subsequently, focus is likely to turn to tonights release of the New Zealand jobs data for the third quarter. Consensus expectations have pitted the survey to show a stable 3.9 percent unemployment rate, positive for the region. The figure would then coincide with the enormous uptick in consumer consumption as seen through last months retail sales figures. The survey for the month climbed a whopping 1.3 percent in the month as consumers came out in full force on higher labor opportunities. The more stable employment figure should provide some support for the underlying pair even as the economy continues to grow a troubling deficit.
AUDUSD
Australian housing data was promising in the morning as further suggestions of a pickup in the sector emerged. As a result, the mortgage survey results continue to purport an economy that is turning around and expanding at a healthy rate confirming further the probability of a year end hike by the Reserve Bank of Australia. Already moving on rates last month to 6 percent, central bankers are likely to cite revised growth figures and inflationary pressures caused by rising commodities costs and increasing wages in raising rates yet again by 25 basis points. Tonights employment data is likely to garner the same amount of focus with the consensus continuing to estimate a stable rate of unemployment in the Pacific economy. Printing 4.9 percent last month, the figure is expected to remain unchanged in the month.
Receiving a boost on carry candidacy in the New York session, the Australian dollar is contending with topside resistance at the 0.7675 figure, slightly below currently at 0.7650. Should the level hold, bulls are likely to make a run for the 0.7700 figure with ease. However, with the barrier likely to hold, selling pressure may mount in the Asian session on profit taking following the sessions move higher. This would purport a move to the 0.7642 figure (23.6 percent fib from the days move) with likely downside capping at the 7627 figure.
NZDJPY
The cross was bid up during the New York session for the eighth consecutive session as traders sided with the carry trade notion once again. Siding with the 700 basis point gain on the Japanese yen, market participants disregarded rising speculation of further revaluation efforts on the part of the Peoples Bank of China. Earlier in the overnight session, Chinese officials were quoted as stating plans for further reserve adjustment and possible FX intervention in balancing trade payments. However, the news was taken as hearsay as the market continued to sell off the yen leg of the cross.
But, the momentum may be shortlived from here on as we head into the Bank of Japan monetary policy meeting tomorrow. Although a decision for raise rates is far from occurring, the concern is that a more hawkish central bank may spark a major correction in the major pair and related crosses, taking back recent gains. Should central bankers reflect an increasing hawkish bias, this would all but confirm a definitive decision by year end. Counting out carry traders in the short term.
Pulling back slightly against the days move, traders are likely to see some profit taking ahead of the Asian session. The paring is likely to show a decline to the 72.50 figure with capping at the 71.76 figure (38.2 percent fib from the days move). Comparatively, bids remain strong, coinciding with technical momentum to the upside. However, the potential is likely unachievable without the aforementioned move lower occurring beforehand.
