Click here for PDF version

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

Aside from the days carry trade buyers, the Kiwi dollar was additionally supported by softer <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US economic data in the morning.  Although personal spending figures rose above the previous months measure, the income survey actually dipped below the June figure.  The lower posting sparks some concern among market participants that slower wage growth might further adversely affect overall economic growth in the worlds largest economy.  Additionally, the PCE deflator was slightly softer as well, dipping below estimates and only rising 3.4 percent as the core monthly figure rose only 0.1 percent.  Factory orders were additionally lower, declining by 0.6 percent against a previous 1.2 percent climb in the month prior as the Chicago manufacturing activity was in line with consensus.  Ultimately, the days reports offered little for dollar enthusiasts to be happy about as the market sentiment remains underwhelming bearish dollars. However, some hope remains for the greenback ahead of tomorrows non-farm payrolls report.  Although expecting an addition of 125K positions, some whispers are being heard of a potential mark higher.

Seemingly overextended, the major looks ripe for a slight pullback in the overnight heading into the weeks biggest event risk, US employment reports.  Profit taking should bring the pair back to previous areas of consolidation at the 0.6507 figure (23.6 percent fib level from the weeks move higher) with definitive bids likely to be triggered at the 0.6473 (38.2 percent fib from the aforementioned move).  However, should momentum continue past consolidation, a break above the session higher would purport a move higher as bulls continue to high the 0.6700 figure.

NZDJPY

The cross was positioned to move higher in the overnight as Japanese economic data continued the downtrend that has been the case for some time now.  Released in the wee morning hours of New York, housing sector data for the worlds second largest economy dipped to the downside and made the case for shorting it against the Kiwi ever more attractive.  Market positioning continued to look for bids on pullbacks after a technical level failed to hold in the overnight.  Now with expectations that the Reserve Bank of New Zealand will likely consider raising rates, buyers are looking to capture the widening rate differential once again, which will stand at 725 basis points.

Finding considerable barriers at the 77.00 figure, the cross looks slightly overextended once again and will likely to subject to a minor pullback on profit taking ahead of the Asian session.  Support floors at the 76.24 figure (23.6 percent fib from the 8/25-8/31 bull wave) are likely to eyed by Kiwi bears with a break below setting up for a test of the 75.77 figure.  However, should the sessions high be broken, bulls are looking for a longer term move higher to the 77.75 figure where considerable short sellers await.

AUDNZD

The Australian dollar was under continued pressure on the session against the New Zealand dollar as the Australian new home sales report gave bears another reason to short the Pacific Rim major.  According to the Housing Industry Association, housing sector losses continued for the month of July.  Sale of new homes in the country fell 3.6 percent in the month and marks the fourth consecutive decline.  Seemingly purported by higher interest rates and rising energy costs to the consumer, the decline is likely to influence Governor Ian McFarlane in keeping rates at the current 6 percent rather than adding another 25 basis points as had previously been expected.  However, the notion is likely to remain as inflationary pressures continue to loom over the benchmark target set by the central bank.

Boosting the Kiwi leg of the cross seems to be further positioning in favor of the slim carry advantage as the major is subject to a larger scale bidding.  Market positioning is also reflecting a lower estimated manufacturing figure that is due out in the overnight but may be subject to profit taking should the figure print higher.  Overall, a negative bias remains in the pair as price action has taken out the significant support bidders at the 1.1760 figure (38.2 percent fib level from the 12/05-8/06 bull wave), just below yesterdays close.  Although a slight pullback is warranted, further shorting looks to be in order.  Resistance tests on the 60-minute chart are looking strong for offers on pullbacks at the 1.1675 region with selling pressure looking to come in at the 1.1730 hourly spike high.