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

The differential for the Euro single currency dipped slightly after ticking up past the lower barrier of our model over the course of the week.  Subsequently, this confirms the previous breakout suggestion mentioned last week, contrary to the continuing consolidation that has remained looming over the market.  Still contained in a range bound scenario, traders are visibly awaiting the weeks risk event involving the anticipated rate hike announcement by the European Central Bank as the market prices in a rate hike.  With implieds lower on the week and stabilizing, actuals have dropped to the same level creating a positive spread.  Ultimately, the event should prop up implieds for a short term move.

GBPUSD

Actuals rocketed over the implied measures for the British pound with implieds staying relatively low over the period.  Now hovering over the implied measure by almost 33 percent, actuals are looking suggestive of a breakout in the underlying spot price.  The only caveat remains a completion of the suggestion should implieds rise to match actuals, taking the spread through the lower band.  Subsequently, the upper and lower barriers look to confirm the suggestion as they widen according to the condition.  With the underlying spot consolidating, the indication matches up fairly well and looks contingent on tomorrows central bank announcement.

 USDJPY

Implieds remained lower on the week in the Japanese yen major with vols dipping to levels not seen since the beginning of this year.  Actuals remained positive while implieds dipped the second most of all the majors with trading keeping the spot price fluctuations minimal in a 111-113 range for the week.  Adding to some risk were comments by Deputy Governor Muto in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Washington, while economic data remains positive for a rate hike in the near term.  With that said, the market continues to focus on the weeks US trade balance and other US based figures before the upcoming Bank of Japan meeting in creating a directional bias.

USDCHF

As has been over previous weeks, the Swiss differential moved in line with euro counters, however, slightly more over the course of the week.  The spread broke through the lower band to rise above and complete the breakout suggestion.  Subsequently, the differential dipped back below before continuing higher as actuals remain hovered over the implieds measure.  Facing similar event risk, current consolidation looks to be broken in the near term awaiting the European Central Banks decision.  The decision and subsequent press conference may weigh heavily on the upcoming SNB decision as speculation has hinted at a possible 50 basis point rate hike.

USDCAD

Wildly moving back and forth, Canadian vols broke through the lower band to confirm a breakout scenario.  However, following a test of the upper band, the signal continues to remain neutral as the underlying spot price forms a tentative, yet textbook, double bottom.  With the spread remaining negative, actuals continue to rise above the implied measure, continuing to be reflective of the strife between crude oil correlations and teetering US economic sentiment.  The near term should see a pop in short term implieds as traders await trade balance data from both North American trade partners, set for Friday of this week.

 AUDUSD

Aussie vols continue to remain muted following the enormous spike higher through the upper band of our model earlier in the year.  With the commodity pull back over the course of the recent month, the underlying spot has been subject to slight downturn with volatilities remaining wide.  Notably, implieds have remained low and stable while actuals, reflective of the market, have spiked considerably higher.  Still sporting the widest of all the majors, the spread actually posted one of the two positive increases in the week and looks to remain neutral in the near term.  This is conducive with the trending price action that has been associated with the spot for some time now.