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Supported by further dollar weakness, the Kiwi dollar jumped by 0.4 percent on the day, translating into a 93 basis point move in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York.  However, the gains may be capped ahead of the upcoming New Zealand current account balance for the second quarter.  With a trade deficit already the equivalent of 9 percent of gross domestic product, the figure is likely to garner plenty of attention with most of the consensus seeing a widening for the quarter.  Expected will be a follow up to the NZ$2.688 billion seen in the previous quarter with the market calling for a wider shortfall to NZ$2.800 billion.  Although disconcerting, the market may be unimpressed by the figure as fundamentals continue to point towards another rate hike by the Reserve Bank of New Zealand.  Granted, the deficit held by the worlds largest economy may be wider, a higher return is usually justification for a carry of that nature.  The notion, subsequently, doesnt preclude an unexpected pullback on initial concerns.  Looking ahead, leading indicators for the US are expected along with initial jobless claims to boost the dollar bears bias.

AUDCAD

The AUDCAD currency cross gained on the day following rather lackluster Canadian economic news in the morning.  Following yesterdays plunge in crude oil contracts and the disappointing consumer price figures, todays in line leading indicators report did little to help a flailing major currency.  For the record, leading economic indicators were in line with consensus estimates, rising by 0.2 percent.  In this case, although widely accepted as positive, the indicators survey further purports the likelihood that the Bank of Canada will refrain from any further tightening this year and even into next year.  The notion has boosted the Australian dollar which, not to some surprise, is still expected to increase rates another 25 basis points by year end.  With housing sector flatlines and consumer spending tepid, there is little evidence that the worlds ninth largest economy will exceed the 2-2.5 percent rate of growth.  However, this is not to preclude a potential tick higher in gross domestic product by any means at the year end which would warrant a rise in interest rates.  Nonetheless, with growth this tepid, it also doesnt preclude a potential rate cut scenario.

All eyes are on the overnight Reserve Bank of Australia bulletin in the overnight.  Reflective of the overall economy, and likely reflective of the recent spate of positive reports, the bulletin would all but confirm the current bias that may be expressed by Governor Ian McFarlane come the near term interest rate decision.  Any weakness may see concerned Aussie bulls run for the door.  However, expectations are running high for a positive indication, supporting a near term hike decision.

GBPUSD

The British pound jumped on the day, to lead our basis point gainers of the top three market movers in New York.  Attributed to the rise was a continued hawkish bias put forth by the Bank of England as Governor Mervyn King and fellow policy makers noted the recent positive increase in consumer spending.  Previously a concern, recent consumption surveys have pitted an acceleration in consumer spending, the most in almost two years, as a result of the stabilization in housing prices.  Now, individuals confident in their current financial situation have become less and less hesitant.  With the boost in manufacturing, employment prospects have additionally improved boosting the likelihood that employed citizens will be spending their wages.  Ultimately, the notion runs full circle, once again boosting the spectre of inflation. Although dipping slightly last month, price increases are expected to gain again, warranting further tightening in Europes second largest economy.

Conversely, the Federal Reserve noted that although inflationary pressures continue to loom over the worlds largest economy, the recent slump in housing and likely pull back in growth will help in abating the concerns.  Evidence of the statement has already been witnessed as consumers are growing reluctant to increase their purchases as overall sentiment dips.   Annualized growth has also declined from the above 5 percent expectations at the beginning of the year to a paltry 3 percent.  Although still positive, the rate of growth is considerably lower than previously expected, lending to dollar weakness.