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The CADJPY currency cross advanced higher for the third consecutive session as core consumer prices rose higher in the month on month comparison.  Although the headline figure showed considerable declines on lower energy costs, the core report which excludes eight volatile items including fruit and energy, rose 0.5 percent in September.  Above the 0.3 percent consensus estimate, the figure seemed to besupported by higher consumer spending as employment prospects continue to remain tight, lifting wages and taking into consideration a tax change that had occurred in the report for the month of July.  Subsequently, this raised the year on year comparison to 1.7 percent from 1.5 and effectively fueled some speculation during the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />North American session of suggestive expansion in the fourth quarter.  Against the yen, the notion was considerably bullish as momentum had already been established on a carry trade advantage.

Ultimately, with rates not likely to advance any time soon in the Japanese economy, traders sided with the Canadian dollar, even as speculation has it that the Bank of Canada will likely consider cuts in the beginning of next year.

Continuing off of the bounce of the 104 handle three days ago, bullish momentum has taken the cross through the 105 with buyers eyeing the 106 figure in taking profits and stayinig with in the limits of the channel trendline.  The resistance barrier is likely to hold with previous tests showing a failed attempt, making the case for likely downside next week.

NZDJPY

Carry traders continued to enter the currency on the fourth straight session in spite of a clear absence of market moving data for the Kiwi dollar.  Instead, traders initiated pre-weekend positions on a lower than expected convenience store sales figure released in Japan.  A clear suggestion of domestic spending and consumption, the report declined yet again, dropping 3.6 percent after a 1.8 percent decline in month of August.  In line with department store sales figures, the final results stand as further confirmation that consumers remain hesitant to spend in the worlds second largest economy on expansion concerns, despite numbers that have suggested otherwise.  As a result, the interest rate hikes that were so anticipated, may not be as forthcoming as some had hoped, are adding to broader bearish tones for the yen, boosting the NZDJPY cross pair in the North American session.  Next week, with inflationary figures expected to be released, the market will be looking for another reason why the central bank may in fact raise rates by another 25 basis points before they year end.

Still visibly overextended, the NZDJPY cross is reflective of bearish undertones as the recently building momentum is visibly thinning.  Confirming the notion is a rising wedge that is coinciding with a bearish death cross in the Stochastic, leading shorts in the pari to eye the 78.25 support on a failure to break the 79.00 resistance level.  Any upside potential will meet with resistance at the 80 handle before moving higher to the 80.50 figure.

GBPJPY

There was plenty of reason to be a pound buyer on the day as gross domestic product was released in line with earlier estimates.  Although some expectations were for a downward revision, the report was higher by 0.7 percent in the month on month comparison, raising the annual rate of growth in the UK economy to a 2.8 percent gain.  An improved figure, the report boosts already priced in notion of another round of tightening in November previously set by a slew of positive economic data that includes improvements in retail sales figures and manufacturing.  Further strength in the near term is likely to be amassed with US dollar weakness, but will be tested with next weeks schedule.

Breaking out of the narrow range that has persisted over the past month, the GBPJPY penetrated the 223 resistance trendline before testing the session high of 223.83.  The break coincides with the 222.95 weekly pivot line and will likely increase the current buying momentum.  However, a near term test looms for buyers of the pair at the 224 handle before any advances to the 225 can be made.  Conversely, a pullback will keep those short the pair to make considerable note of the 221.30 support trendline that lies just below.