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Kiwi strength on the day topped our three movers as producer prices and subsequent economic data boosted the underlying currency.  For the month, producer prices jumped 2.7 percent on the input and 2.7 percent on the output measures.  The recent figures added to already high inflation in the economic region purporting speculation of further monetary tightening in the near term by the Reserve Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New Zealand Governor Allan Bollard.  In addition, job markets remain tight with the ANZ job survey hitting highs not seen since 2001.  Coupled with stabilized housing data, the survey remains positive for an economy that has seen nothing but dour data in the past quarters, leading some to pare back long or bid positions in the pair.  However, now pitted against a seemingly weaker dollar, further in-flows can be expected.  The only caveat looks to be tomorrows US consumer price index report, which is expected to show a slight slowdown in the US economys inflationary pressures.  

Nonetheless, gains were made on the day as stops were triggered above the 0.6320 figure, pushing the pair higher to the 0.6358 session high.  Option defense has thus kept the pair under wraps of the 0.6375 and 0.6400 figures as traders remain wary of initiating buy orders on thin summer volume and the consumer price report tomorrow.

Already taking a bounce off of the 23.6 percent fib at 0.6267 on the 240-minute view, the currency pair is looking for a test of the overnight 0.6373 high.  A break above the resistance, given option barriers, bulls look to make for a run slightly higher till the US CPI report.  However, given the event risk ahead, consolidation and range bound environments are probable, keeping the 0.6267 support floor.

AUDUSD

Ranking as second to the Kiwi, the Australian dollar opened higher and kept climbing during the New York session as US economic data was considered softer than usual.  Sparking off the triggered stop momentum above the 0.7625 figure, core producer price data showed a decline in wholesale price increases as the EmpireState manufacturing survey was less than consensus figures.  Purporting an imminent halt in Federal Reserve tightening policy, the lackluster surveys contributed to the Aussie bullishness as overriding sentiment sides with a probable continuation by the Reserve Bank of Australia.  Subsequently, capping gains as we head into the Asian session looks to be option barriers just below the 0.7700 figure.

Looking ahead, traders remain wary of initiating long positions ahead of the US consumer price index report.  However, reports based at home should give the underlying some lift in the overnight with both Westpac consumer confidence and wage price index reports expected to show improvements in the quarter.  Wage price index results are expected to climb above the previous quarters figures by 0.1 percent.

Technically speaking, the Aussie seems more supported on the chart as a bottom trendline provides plenty of strength for the bids to take place.  Taking a bounce off of the bottom trendline, coinciding with a jump off of the 0.7600 figure, the underlying looks ripe for a slight pullback in the Asian session.  However, further momentum is imminent as the pair is rising to the occasion of a test of the 0.7700 level.

EURUSD

The EURUSD rounds out our three market movers on the day, climbing on thinned summer volume as US economic data proved less than expected.  Along with figures that fell below consensus, the net foreign security purchases report offered little reprieve for a somewhat flailing dollar as it was revealed that a concentration of net inflows was attributed to higher US rates.  However, the question remains, with a halt in monetary policy expected, will inflows turn into capital outflows as investors search for higher rates of return.  With the Euro zone likely to raise rates an additional two times, the market is pricing such an effect, even as the rate falls somewhat short of US rates.  Economic data has also been on the side of the Euro zone as growth is steadily rising on growing exports in the region with consumer sentiment turned slightly higher in the current assessment.  Now, focus turns to the consumer price index report tomorrow.  Should the figure end lower than expected, market participants are likely to heavily weigh the Euro zones inflationary data later on as forecasts have lifted the target rate to 4 percent in the near term.

Bouncing off of the 1.2709 support in the session, further momentum is imminent on a break of the current 1.2800 test.  Consolidating into the Asian session, the pair is likely to be subject to mild profit taking as the consensus awaits tomorrows inflationary figures.  A failure here would likely purport a move lower for a retest of the 1.2700 figure and lower.  Selling pressure is looking heavy above at the 1.2830 figure.