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The kiwi dollar was boosted during the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session despite better economic data in the morning hours.  For the month of July, manufacturing activity was stronger than consensus estimates in the United States, bolstering the personal consumption expenditure figure that showed a 0.2 percent rise in prices for the month.  Evidence of inflationary pressures, both reports had little effect on the market today as Paulson reiterated the current administrations priority to a stronger dollar.  Now, given the fact that statements were a bold continuance of where former Secretary Snow had left off, the guidance gave little hope to dollar enthusiasts as previous sentiment had underlying demand for a weaker dollar.  Hearing the same story repeated, traders took to higher yielding currencies such as the New Zealand dollar.  Although fundamentally weak, the currency still offers the highest return of all of the industrialized economies, leading to a short term blip.  Demand additionally perked up ahead of the Reserve Bank of Australias interest rate decision tonight.  Expected to raise rates to 6 percent, market sentiment is lying with the fact that further hawkish bias will give central bankers impetus to raise an additional time towards year end.  The decision and hawkish followup is expected to boost higher yielders and commodities such as the Kiwi.

Profit taking is imminent in the pair as the price action hovers just below the channel resistance on the 240-minute chart.  With MACD and Stochastic in overextended territory, the suggestions coincide with heavy ceilings at the 0.6200 figure with definitive defenses at the 0.6220 level.  Capping further gains on the session, sellers are eyeing a retest of the short term 0.6150 support floor with a break below likely setting up for a retest of the 0.6100.

GBPUSD

The British pound additionally received a boost higher on continued dollar bearishness.  With dollar fundamentals, particularly the better than expected ISM figure, tossed to the side, traders took to UK fundamentals in supporting the sterling.  In the overnight, according to Nationwide, the market witnessed higher prices once again in the UK housing sector.  Rising following three months of more sluggish growth, the July figure underpins the annualized comparison to hit 15 month highs of 5.9 percent.  Further confirming a strengthening housing sector, the report lends to the belief that consumers are still seeking residential property.  Ultimately, this little tidbit may be skewing consumer reports.  If consumers are spending on housing, they may not be spending as much disposable income in stores, leading to poor sales figures.  The sentiment is still likely to weigh on the minds of central bankers when they next meet this week to decide on benchmark interest rates.  Although currently not pricing in a rate hike this soon in the year, whispers can be heard of a possible decision higher to preemptively curb a rate of inflation that is running at an above 2 percent rate, the central banks benchmark rate.

Following up on a clear break of resistance, the sterling looks ripe for some profit taking in the overnight on the 60-minute chart.  Taking out orders at 1.8700 and above, bullish momentum looks to be slightly short lived with any retracement likely to meet further bidding at the even figure.  Capping gains to the topside is the 1.8800 price level with bears eyeing the 1.8550 for an extended retracement.  The decline is further confirmed by a slight divergence in the MACD histogram in the same time period.

USDCHF

The Swissie followed the Euro lead in the morning following an all too tempting knockout option level that was sought after in the early New York afternoon.  Rounding out the top market movers as the largest decliner on the day, the franc gained 112 pips or 0.4 percent against the dollar ahead of the imminent European Central Bank decision.  Although not readily governed by the central bank, speculation is leaning towards a probable follow up by the Swiss National Bank, should policy makers increase the interest rate by another 25 basis points.  Inflationary and unemployment reports make a pretty die hard case as prices increased at 2.5 percent annualized clip and unemployment improved for the overall zone.  As a result, with the pair still following in line with Euro fluctuations, look for the decision this week to provide plenty of direction in the market.

Support is coming in heavy at the current price as the USDCHF continues to consolidate following the North American sessions move.  Confirming a short term blip looks to be heavy buying on confirmations from the price oscillators on the 240-minute, coinciding with the 1.2250 figure.  With buying emerging, bulls are eyeing the 1.2350 target in the near term.  However, with uncertainty on the upcoming central bank decision in the Euro zone, short side interest should not be ruled out for a test of the 1.2200 at this point.