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Momentum from yesterdays more dovish outlook by the Reserve Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Australia pushed the AUDJPY cross lower in the New York session.  Coupled with lower than expected gross domestic product growth, the dovish sentiment is holding the Aussie under water while boosting the Japanese yen, even as the cross offers one of the best carries in the market.  Currently the spread stands 575 bps wide, only second to the NZDJPY cross.  Additionally boosting the cross lower are statements that were released in the overnight by German Deputy Finance Minister Mirow.  In reference to the upcoming G7 meeting in Singapore next week, Mirow stated that there would be intended discussions concerning the yen currency at some point during the meeting.  Sparking the overnight selling pressure on the USDJPY pair and subsequent yen pairs, the news was quickly refuted by the Ministry of Finances Watanabe who countered the statements by indicating no such intent.

Technically speaking, the cross looks to have established an interim support level at the 1.8700 figure as it coincides with downtrend support.  Now consolidating as we head into the Asian session, further momentum to the downside is plausible as the price action tests resistance at the 1.8780 spike high and trendline resistance on the 60-minute perspective.  However, confirmation would be necessary on a close below the key 8700 handle before further shorting is possible.

AUDUSD

The major leg was subject to selling pressures on yesterdays momentum, as in the above mentioned AUDJPY cross.  Although dollar bearishness continues to loom over the markets, yesterdays more dovish Reserve Bank of Australia decision and tepid quarterly growth measure added to a seemingly overbought condition.  The sessions results places the major as the second ranked mover on the day right behind the cross.  Adding to the currently running bearish sentiment was the mornings employment data.  Although the employment change beat estimates of 10,000 positions, the unemployment rate ticked higher in the month.  Rising from a previous 4.8 percent benchmark, the figure ticked higher to 4.9 percent.  Although initially bearish, the figure may very well be reflective of a temporary adjustment rather than a longer term scenario.  Nonetheless, the market took the news in combination with yesterdays bearish suggestions.

Breaking clear though support at the 88.84 floor (38.2 percent fib level from the 8/8-9/3 bull wave) and 88.52, price action looks to be consolidating well above the 88.22 figure (61.8 percent fib from the aforementioned move).  Although a pullback is likely on profit taking as we head into the Asian session, further downside is imminent as offers are likely to emerge on the 88.50 figure with no reprieve till well below the 8800 handle.  Comparatively, however, upside momentum will likely build should the aforementioned resistance fail.

GBPJPY

Cascading downward through the New York session, the GBPJPY cross pair was subject to massive unwinding in carry trade positions as stop orders were tripped well below the 219.50 figure.  With momentum traders waiting in the wings, the cross had no chance in the overnight.  Additionally contributing to the slide was a slightly disappointing decision by the Bank of England as political upheaval continued to plague the Labour party.  Leaving interest rates at the current 4.75 percent, the Bank of England voted for no rate change this month even as inflationary pressures continue to hover over the economy.  Widely expected by every market participant, some speculation had been placed on a possible addition of 25 basis points to end the years tightening campaign.  As a result, the lightly placed disappointment added to the pound legs woes against the Japanese yen while still offering some optimism of another rate hike in the near term.

Sliding all the way down, the GBPJPY cross is currently consolidating ahead of the Asian session.  Sitting on a key level, further downside looks likely with bulls eyeing the 217.00 (August 3^rd hourly spike low) figure for bids to emerge.  Should momentum build on the level, the run will likely last for a test at the 219.65 level (38.2 percent fib from the 7/31-9/1 bull wave) where profit takers and offers are likely to be residing.  However, should the current support fail to do the job, downward targets are looking heavy at the 215 figure.