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Dollar weakness propelled the Kiwi higher during the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session following an unexpectedly lower producer prices figure.  Although core rates were slightly higher by 0.6 percent, the overall figure was comparably lower by 1.3 percent on the month.  The headline figure decline looks to be reflective of lower commodity prices as producers will more than likely pass on costs savings to the consumer in order to capture further market share.  Subsequently, the lower consumer prices will likely keep Federal Reserve officials at bay in making a preemptive decision.  The fear still remains, however, that rate cuts may be in the future as further declines in inflationary pressures may prompt a more dovish central bank.  As a result, focus is likely to be placed on tomorrows CPI report, with hopes that prices remained stabilized.

Kiwi broke a technical level to the upside in pre-New York trading, helping the major currency out despite a higher than expected US foreign securities purchases report.  Crunching the 0.6612 figure, the Kiwi broke higher only to remain bid throughout the session as the major took out the highs for the past five sessions.  However, the bid tone may be temporary as the underlying currency is eyeing resistance at the 0.6650 figure, just below the session high.

Rising to the 0.6654 (R2 Weekly Pivot), the Kiwi looks slightly overextended heading into the Asian session.  With Stochastic confirming the notion, showing a definitive death cross formation, the underlying major currency pair looks ripe for a pullback.  Although the first level of support is coming in at the 0.6632 figure (23.6 percent fib from the 2-day move) on the 60-minute chart, bears will likely make short work of the figure till hitting the 0.6615.  Formidable bids are likely to resurface as the level acted as previous resistance.

AUDNZD

Bullish Kiwi sentiment spilled over into the AUDNZD currency cross even with bidders emerging over the upcoming leading index report expected to be released in the overnight.  Rising by 6.4 percent in the month of July, the leading index report is expected to rise once again as economic reports have been rather favorable for the Aussie dollar.  Should the advance be recorded, this would be the third consecutive increase, lending to further speculation of another round of tightening when central bankers meet later this year.  Adding to the potential for an increase on the report has been recent retail sales figures and a rising equity stock market. 

Finding a temporary bottom in the 60-minute perspective, the price action seems to be finding support at the 1.1321 figure (61.8 percent fib level from the 10/12-10/17 bull move).  With Stochastic instigating a golden cross in the short term, suggestions are for a tick higher heading into the Asian session ahead of the report.  Subsequently, MACD is also showing a bullish convergence in the histogram with both moving averages converging to the positive side.  The indications will likely purport bidding in the near term with bulls setting their sites on a break above the 1.1346 before an approach can be mad eon the 1.1372 (38.2 percent fib level from the aforementioned move).  Coincidentally, with support coming in from the lower trendline on the 60-minute, a break below would be considered a catastrophe with bears likely to eye the 1.1250 as the first barrier lower.

NZDJPY

Profit taking took the price action back in the overnight along with the spill over that was witnessed in the AUDNZD from the bidding pressure in the major.  However, with oscillators suggestive of a turn, the short term momentum is likely to be thinning out as we head into a significant resistance area.  Already accounting for three failed attempts, the 79.10 figure is likely to keep pressure on Kiwi bulls forcing bears into the picture.  Both oscillators are conducive to a near term pullback with a death cross forming in the Stochastic and a divergence confirming in MACD with moving average components likely to cross downward in the near term.  With a pullback likely, bears will make short work of the 78.82 and 78.70 figures with some defenses protecting the 78.60 (50 percent fib from the 10/16-10/17 bull move).  Definitive defenses are likely around the 78.50 figure, which is doubling as a major psychological floor on the 60-minute.  Conversely, should the ceiling fail at this point, bulls will likely be eyeing the 79.50.