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The Canadian dollar continued to lose in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session following less than expected inflationary figures released in the morning.  According to Statistics Canada, consumer price inflation met expectations and dropped from the 2.4 percent pace seen in the month of July, rising at a 2.1 percent pace.  The core figure further confirmed future inaction by the Bank of Canada, rising in line with consensus estimates.  Given the recent dearth of uplifting economic data, the report is adding to growing sentiment that growth is flatlining in the worlds ninth largest economy, leaving central bankers to dismiss any likely tightening in the near term.  Coincidentally, the sentiment is growing so much so that todays disappointing dollar data wasnt reason enough to give the Loonie some strength spurring on a move above the key 1200 and 1250 figures.  Further momentum may be stalled in the overnight as two more key reports are likely to offer some reprieve from the day.  Both leading indicators and wholesales sales are expected to tick higher in the month, lending to some profit taking initiatives.

Breaking out of the channel that has persisted over the past two weeks, bull bids took out the topside barrier at 1.1215 leading to the session high well above the 1.1250 level.  Approaching the 1.1290 figure (pivot daily calculated R3), offers are emerging on a profit taking move that will likely spur a retest of the 1.1250 figure.  Stochastic is supportive of the move on the 60-minute timeframe as the oscillator approaches the overbought territory, leading to a death cross.  However, a break above would signal a likely move to 1.1400, coinciding with the range bound scenario.

NZDJPY

Reversing gears, profit taking dominated the cross pair even as Japanese data was less than exemplary on the day.  Falling on both reports, Tokyo and Nationwide, figures for the month continued to show weakness in consumer demand.  For the month, the Nationwide figure dipped by 0.9 percent as Tokyo department store figures were lower by 1.6 percent.  The annualized figures continue to suggest that consumers remain skeptical of the current economic recovery even as prices seem to have bounced higher on rising costs and prices.  Additionally, pre-positioning is also taking place with traders well aware of the potential disaster thats lying ahead.  Expected for tomorrow night will be a report carrying the current account balance for the New Zealand economy for the second quarter.  Estimated to have ballooned once again, the higher deficit is likely to place some interim weight on the cross as a rising deficit will likely erode at any near term growth.

Hitting resistance at 78.50, offers are taking the cross lower as the wider daily perspective sports a death cross in the Stochastic, coinciding with the 78.72 figure (daily pivot R1 calculation).  Although momentarily consolidating ahead of the Asian session, a subsequent upside failure of the 78 level is likely to lead to a support test of the 77.25 (daily pivot S2 calculation) with near term capping at the 76.34 figure (50 percent fib level from the 9/8-9/18 bull wave).  A subsequent break of resistance at the 78.72 figure should lead bulls to the 80 handle.

EURCAD

Canadian dollar data disappointment spilled over into the EURCAD currency cross, topping our list of market movers by basis points on the session.  The surprise bid for the cross came amid weakness in the wider sentiment in the Euro zone as the investment community saw upcoming weakness in the intermediate term, bringing into question the necessity of further rate tightening in the European economy.  Additionally attributed looks to be further weakness in crude oil demand.  Already beaten down from the $78.42 high on July 14^th, contracts are trading through the $62 handle, currently at $61.80, on rising speculation of increasing stockpiles in tomorrows EIA report.  As a result, with 12 percent of the Canadian economy dedicated to commodity exports, lower prices will likely thin growth in the component.

Range bound for the first half of the month, the currency cross has broken above the topside trendline at 1.4270, rising to the session high of 1.4303 before profit taking is likely to ensue ahead of the Asian session.  Stochastic is confirming the notion as the death cross emerges in the overbought area.  As a result, off of the days move, bears are eyeing the 1.4267 figure (23.6 percent fib level from the sessions move) with capping at the 1.4244 (38.2 percent fib level) before bids on a pullback emerge.  As a result, bull traders are not precluding a retest of the session high should price action remain.  Conversely, a break above would see bulls aim for the 1.4350 figure.