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

<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Pound Follows Major, Disregards BOE Minutes

Cable followed the major action against the dollar on the session, topping out the top three market movers with the biggest point advance on the day.  Discounting the rise in core US consumer prices, UK data was relatively nonexistent set aside from the Bank of England minutes report seen in the overnight.  Unsurprisingly, the central bank voted unanimously to keep rates at the current 4.5 percent as wage inflation remained subtle, not warranting a rate hike decision.  All this could potentially change as the meeting preceded the weeks consumer prices report.  With that said, futures traders are now pricing in the possibility of at least one rate hike by the end of the year, giving pound bulls the strength to break back above the 1.8400 figure.  Taking a look ahead, the months CPI report should do well to bolster more momentum in the favor of the sterling with both retail sales figures and gross domestic product expected for the weeks end.  Retail sales are expected to show a rising confidence and interest in consumers with the gross domestic product figure offering some further positive sentiment.

Rumormill

Sellers are likely to emerge at the pivotal 1.8450 figure as profit taking is surely to take place heading into the Asian session.  Subsequent shorting is set at 1.8470 with comparative bids to buy circling the 1.8330 figure.   Should the figure break, notable support is coming in at the psychological 1.8250 figure which coincides with the previous sessions consolidation and an upwardly trendline on the 240-minute display.

EURUSD

Decision Still Murky On Fed Testimonial

Traders were enticed to buy dollars at the New York open following a more than promising consumer prices index report.  Expected to rise only slightly by 0.2 percent, the core figure which excludes volatile food and energy components rose 0.3 percent in the month.  Indicative of rising inflation, the market continued to expect anther round of rate hike considerations on August 8^th.  However, shortly thereafter, the notion was quelled as Chairman Bernankes statements to Congress were less than hawkish.  Citing calmer inflationary pressures through slowed growth and previous rate hikes, the Chairman in essence brought bullish greenback proponents back down to earth.  The testimony comparatively gave every reason to pare back long dollar positions and initiate euro based longs, even after yesterdays dour ZEW survey.  However, sentiment still remains uncertain of any future moves by the central bank, offering incremental hope for the dollar at this point.  Notably, bolstering some support into the appearance before Congress, central bank buying tipped off above the 1.2450 figure to keep the price above water.  The weeks data is running thin with the Philadelphia Fed data on key for tomorrows action.

Rumormill

Offers are touted above at the 1.2600 as the major pair has seen some pullback in the early Asian session.  Following the days run up, the level coincides with near term resistance.  However, should the barrier fail to hold, traders would do well, only slightly higher and above to 1.2800.  The aforementioned selling looks persistent at the 1.2620 and 1.2640 figures with comparable bids located at the 1.2540 and 1.2510 levels.

EURCAD

Why Not EURCAD

Underpinned by action in the EURUSD major, the EURCAD cross pair rose on the session and was attributed to two main themes on the day.  First and foremost, crude oil prices took a hit, falling through $73 a barrel as EIA stockpiles report gave suggestions that supplies remain healthy in the week.  It was also noted the recent conflict in the Middle East may not affect overall global supply as previously estimated, exacerbating the contracts decline.  Secondly, with the European Central Bank likely keep their hawkish bias, traders sided with rising interest rates in the Euro zone.  The sentiment compares with a potential stall in rate decisions by the Bank of Canada as Governor David Dodge continues to keep watch over worsening the current inflationary environment.  With USDCAD rising higher on the day, traders decided to take the same route through EURCAD, attempting to take out the 1.1400 figure on the major pair.  Moving lower into the Asian session, further profit taking is likely to ensue before any momentum keeps the pair to the upside.

Rumormill

The EURCAD cross price action bears resemblance to the previous two as the current run up is meeting considerable resistance heading into the session start.  Slight profit taking can be expected with the key barrier at 1.4300 providing to cap gains in the near term.  However, further momentum is likely as the price action has technically jumped off of the 38.2 percent fib level from the June to mid July bull wave at 1.4218.  With support holding the figure is likely to test the 1.4350 in the near term with a push to 1.4450 should the aforementioned fail.