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The Kiwi dollar was boosted on the day following higher than expected money supply figures which showed a clear and present danger of inflationary pressures.  Rising over the 10 percent gain seen prior, the annualized comparison rose 12.4 percent in the month of July.  The figure is likely to prompt further interest rate hike consideration by the Reserve Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New Zealand Governor Allan Bollard as price increases continue to be a looming concern for policy makers and economists.  The report was followed up by a better than expected Australian retail sales figure.  Expected to climb incrementally, the monthly figure for July trumped earlier estimates of a 0.5 percent rise, climbing 0.6 percent.  The suggestion of positive consumer spending continues to lend a bias to the Pacific Rim economies that will ultimately lead to growth prospects in the near term.  Subsequently, the notion should boost demand for the underlying domestic denominations as investors seek more stable returns.

Continuing off of the momentum seen yesterday afternoon, bidders retuned en masse to take out the 0.6450 figure in the overnight.  Subsequent to profit taking and consolidation, buyers returned to prompt a test of the 0.6480 figure where stops were triggered in making a move higher to the 0.6505 resistance.  In the 60-minute chart this translates into price action that is slightly overextended and likely due for an intermediate pullback before further bullish ground can be taken.  The first level of support is coming in light at the 0.6463 figure (23.6 percent fib from the 8/25-8/30 bull wave).  Heavier support floors remain at the 0.6437.  However, should the session high be taken out, upside momentum would negate the aforementioned levels as the bulls make a move to 0.6600.

NZDJPY

The cross was bid on much the same premise as the major with traders taking the cross higher on running speculation of rising interest rates in the New Zealand economy.  Bolstering the notion further were lackluster economic reports out of the worlds second largest economy, Japan.  Showing that consumers continue to be hesitant in their spending ways, overall retail trade dipped 0.2 percent on the month, with most expecting a rise of 0.5 percent.  The lower figure fueled speculation on the day that further rate hikes in the economy will not be as forthcoming as planned, making the yen a carry trade favorite once again.  Coupled with the highest rate among the industrialized nations that New Zealand offers and traders were privy to a 129 basis point advance in the session.  Although with momentum likely to carry through the Asian session, traders remain waiting for the Japanese manufacturing and industrial production figures.  Expected to both carry a positive bias, further weakness in the upcoming reports will add to already bearish sentiment in the market.

Clearly breaking through the upside trendline on the daily time frame, the NZDJPY is poised for a move higher in the longer term with resistance seemingly absent till well above the 77.00 handle.  The notion should provide for some buying on dip opportunities especially following todays boost higher.  Already pulling back, the cross is likely to be a subject of selling as we enter the Asian session, with bears eyeing a clear assault on the 75.50 figure.  Although some support is likely from the 75.66 level (23.6 percent fib from the 8/24-8/30 bull wave) bids will likely emerge at the 75.30 figure with significant interest at the 74.85 figure.  A break below the aforementioned will signal a move lower on a failure of 73.80, final floor.

AUDNZD

Traders disregarded the optimistic retail sales figures for the Australian dollar and took to bidding the New Zealand dollar leg higher in the AUDNZD cross pair.  With an even higher rate likely to further speculation, traders bid the overall pair lower citing both kiwi money supply and an otherwise earlier business sentiment report.  Additionally contributing to the overall bid tone for the Kiwi dollar was spill over from the major and subsequent cross action.  With the carry trade still well engrained in the market, its no surprise NZDJPY and NZDUSD bidding on the day turned the AUDNZD lower, even as fundamentals were rather contrary to market positioning.  Holding steady in the overnight session, the pair broke through technical levels at the New York open taking stop orders down through the 1.1775 figure until hitting the session bottom near 1.1730.

Continuing off of a textbook head shoulders formation, the bearish momentum took the pair straight through the 1.1800 handle in the overnight and now looks to make a turn on considerable support floors at the 1.1768 figure.  The level coincides with the bottom trendline of the recent channel that has formed on the daily.  As a result, technically speaking, bids look to emerge at and above this level on a retest of the 1.1800 figure.  Should the momentum purport a move higher, gains may be capped on heavy resistance at the 1.1863 figure.  Comparably, a move lower would negate the notion with no reprieve for the pair till the 1.1442 figure.