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Evidence was further supportive of euro bullishness on the day as economic data was in favor of a rate hike in the Euro zone.  Released in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session, French consumer spending figures vaulted higher above the consensus figure for the month, marking a 3.3 percent increase against the consensus 0.5 percent expected.  The August figure trumps the -0.9 percent pullback in the report last month and continues the strength that we have seen over the past quarter in concurrent reports.  The results now pull the yearly annualized figure higher to a 6.4 percent rate.  Wages were subsequently higher in the French economy as well. 

Additionally, the Italian trade surplus boosted notions of further growth in the zone as the figure turned positive.  Expected to stand at the 1.321 billion euro deficit for the month of July, the trade balance turned optimistically positive to stand at a 185 million euro surplus. Surprising for an economy that contributed to a monthly decline in this months productivity components, the trade balance is surely to contribute to a positive picture of the zone and an ultimate decision by central bankers to prop rates higher.  Subsequently, new industrial orders were higher by 9.7 percent in the annualized comparison for the economy, overshadowing the higher carry trade by the Australian major leg.

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Although encouraging, Australian new home sales somewhat concerned investors as the detailed figures tell a different story than depicted in the headline release.  According to the Housing Industry Association, new home sales figures for August jumped higher by 2.1 percent.  However, it seems as thought the bulk of the increase came from resource developed areas including Queensland and Western Australia.  Comparatively, in resource poor states such as New South Wales and Victoris, housing sales actually declined or weakened.  Reflective of partial area growth in the economy, the figure may be reflective of a divide and ultimately overstatement of growth in the Pacific Rim economy.

Conversely, boosting the underlying Canadian dollar was lingering momentum from yesterdays retail sales figures.  Soaring to a record high in the month of July yesterday, the figure gives hope to bullish individuals as the number confirms support from consumers.  The only concern that remains is the fact that gains may have been a one time improvement resultant from the recently implemented federal tax rate cut.  Lowering the tax rate to 6 percent from 7, policymakers may have sparked consumption of big ticket items in the month.  Now whether or not they remain underpinned is the next question.  Nonetheless, coupled with an incremental tick higher in crude contracts, the momentum continues to give the Canadian dollar a bullish bias.

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With housing prices increased, traders will be looking to next weeks data in offering some clues as to possible policy implementation when the Reserve Bank of Australia next meets.  Next week, the TD securities inflationary report is expected to garner some attention, with the consensus expecting a mild increase in prices.  The hawkish bias should confirm ample evidence of rising growth following the leading index report earlier in the week.  Still offering one of the highest rates of return among industrialized nations, the Australian dollar should gain some momentum to break through the recent range bound environment heading into the following weeks decision.

Consolidating on the 0.7497 figure (38.2 percent fib level form the 3/06-5/06 bull move), the level is continuing to offer ample support to keep the price action stagnant at least in the interim on the daily front.  Comparatively on the 60-minute front, bids are looking light heading into the close right above at 0.7500 with a golden cross in the Stochastic confirming the notion of a near term bid fest, purporting a bullish test of the 0.7550 figure (likely broken earlier on a barrier option strike).  Should the level fail, however, bears would be eyeing a fall to the0.7450 figure.  However, with a golden cross additionally signaling a near term uptrend, the latter is unlikely.