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

The overnight selloff continued through the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session as the underlying major followed in time with the Australian dollar counterpart.  With commodities broadly lower on the week and Reserve Bank of Australias dovish sentiment hovering over the market, traders continued to pare back positions ahead of the weekend.  The notion took the Kiwi major through the 0.6400 figure as we head into afternoon trading.  Looking ahead to next week, bias should shift back to the Kiwis favor as key reports will likely overshadow dollar weakness on already weaker anticipated data.  However, the bulk of the attention will likely be placed on the Reserve Bank of New Zealands overnight cash rate decision.  Expected to keep the rate at the current 7.25 percent, the market will be focusing on any subsequent statements that will indicate further hawkish measures by Governor Alan Bollard.  Already anticipating a 25 basis point rate hike by year end, the Kiwi dollar may experience a continued selloff should the central bank bias turn to the overwhelming deficit and tepid consumer spending.

Further downside in the intermediate term is probable as the daily trend has broken straight through the bottomside trendline that has kept the price action supported in recent months.  A daily close here would propagate a move further lower at next weeks start to the 0.6300 figure with definitive bidding that will cap gains at the 0.6200 level.  However, even with the overall bearish bias, the underlying currency is likely to experience a slight pullback on the days move as it currently hovers support at the 0.6350 figure.  With stochastic showing oversold indications a retest is probable at the former support figure of 0.6389 (61.8 percent fib level from the 8/15-9/05 bull wave).  Comparatively on the 60-minute time frame, should the 6350 figure fail to hold, bears would be eyeing the 0.6300 handle.

NZDJPY

Yen strength took the NZDJPY cross lower in the North American session following the highly anticipated hold decision by the Bank of Japan.  Although noting the presence of inflationary pressures in the worlds second largest economy, Governor Fukui stated that the central bank will likely keep rates hikes to a slower pace in order to ensure the economys growth prospects.  The subsequent statements were coupled with further Kiwi major selling over the previous week as traders pare back exposure and the market unwinds carry trade positions on last weeks capital expenditures report.  As a result, next weeks data is likely to push the cross in either direction with key economic reports expected from Japan, including gross domestic product and industrial production figures.  Should reports be higher, there would be some contention in the market from the weeks anticipated Reserve Bank of New Zealand decision.

Spiking lower on the session, the daily shot has the price action touching ever so slightly on the 73.98 figure (38.2 percent fib level from the June 06 September 06 bull wave) where bids have emerged to support the current pullback heading into the weekend.  Pulling back slightly, further downside looks imminent at the open next week with Stochastic showing slightly overbought figures in the 60-minute shot.  Should offers emerge heavy, traders can expect a definitive retest of 7400.  However, support is coming in strong just below as it coincides with the lower trendline supporting the price action.  Conversely, plenty of upside remains with bulls eyeing a run to above the 0.7450 figure should bids come in heavier.

USDCAD

The Canadian dollar was much weaker on the session following a disappointing employment report in the morning hours.  Expected to add 15.9K employees to the overall payroll, the employment change survey actually declined 16,000 on the month.  The figure follows up on a 5,500 drop seen in the month of July.  Subsequently, this forced the unemployment rate to tick higher by 20 basis points, raising the benchmark rate to 6.5 percent versus a 6.3 percent print as expected by the consensus.  A pessimistic figure by far, the employment surveys lend to an already bearish bias the economy seems to be pulling back, not warranting any further moves by the central bank as had been the previously expected.  The weakness of the Loonie on the session looks to also be attributed to the recent decline in crude oil contracts.  Although the correlation hasnt been there for some time, recent speculation has turned up the heat on the widely accepted relationship.  With that said, considering the fact that crude oil is now well below $67 a barrel, weakness in the underlying currency looks to persist for the moment.

Stop triggering added to already positive momentum for the USDCAD currency pair as orders were taken higher at the 1.1100 and 1.1150 figure, purporting a move to the 1.1200 handle.  Massive offers on the days move then capped the momentum at the weeks end.  Now consolidating just below the figure, a temporary retracement is likely on sheer profit taking.  Bears will likely eye the 1.1140 figure (38.2 percent fib level from the days move).  However, with bids likely to emerge on continuing momentum, bull will likely see retest of the 1.1200.  Stochastic is confirming a near term pull back by showing a death cross at the close.