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There was dollar strength in the morning session, then there was dollar weakness.   Spurred by some insight into the merchandise trade balance and definitive weakness in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Philadelphia region, the Japanese Yen moved higher against the US dollar following a move t the 117.50 figure in New York.  Sparking off demand for the Asian currency, the merchandise trade balance was somewhat optimistic in that exports remained increased on the year by 17 percent.  However, imports increased further as it seems domestic demand has picked up for foreign made goods, although the increases in part were due to higher energy costs.

Nonetheless, the figure gave hope to the fact that consumer demand has been relatively weak for some time, hindering any decision in favor of a rate hike come year end.  Additionally boosting the major against the greenback was noticeable weakness in the Philadelphia region.  Contrary to the EmpireState manufacturing survey, activity in the manufacturing sector declined for the first time in three years, signaling contraction in the region.  Concerning, the figure spurred the notion that weakness in the housing sector may very well be spilling into the overall economy.

USDCAD

The Canadian dollar strengthened on the day following the weaker than expected dollar based data as consumer spending in the worlds ninth largest economy bore positive results for the month.  Rising to a record high, the retail sales figure in the Canadian economy vaulted higher by 1.5 percent.  With the core figure stable at the 0.7 percent print, or C$25.2 billion increase, bullish speculation took the underlying currency higher despite the crude oil contract moving lower yet again in the New York session.  Nonetheless, prospects are holding better for the Canadian economy as the manufacturing survey is likely to confirm the definitive end to the Federal Reserve tightening cycle, leaving some still hoping for upward increases in the Canadian benchmark rate.

Forming a textbook triple top just below the 1.1300 figure, Loonie bulls have taken the spot figure through the 1.1250 and 1.1200 figures, finding consolidation just above the 1.1150 at 1.1162.  This coincides with the 50 percent fib level from the weeks move on the 60-minute shot   Given the fact that the level has been tested before, the likelihood remains strong of a definitive barrier in the short term as it coincides with the bottom of an uptrending channel.  Stochastic is confirming the notion, forming a golden cross on the session.  As a result, bulls are likely to eye the 1.1234 figure (23.6 percent fib level from the aforementioned move) in the overnight.  Should the current support fail, conversely, bears would be eyeing a free fall to the 1.1137 figure.

GBPUSD

Even British data was on the positive side as the CBI released its industrial trends survey in the over night.  Much to the chagrin of Pound bears, the survey posted by the Confederation of British Industry, was once again higher than the negative eight figure shown in the previous months report.  Improving to the negative 5 reading, the survey results were the highest improvement since 2004 and add to current running speculation that rates are likely to rise once again in Europes second largest economy.  Already pricing in another 25 basis point hike, the market is beginning to see a possibility of another rate hike next year as consumer demand has picked up in line with an overall uplifting in the manufacturing sector.  With UK car production the sole report to end the week, traders will be looking ahead to next weeks gross domestic product figures and distributive trades report in confirming the aforementioned.

Losing momentum, pound bull exits are likely around the corner as the price action approaches the 1.9050 figure. Seemingly overbought, another move higher would see a minor pullback first as conditions ripen for profit taking.  Stochastic is confirming the notion, formulating a death cross with bears eyeing the 23.6 percent fib level at 1.8963.  Capping to the downside is likely to keep price action at the support of 1.8919 (38.2 percent fib level) with definitive barriers around the 1.8884 level.  Should the price close above on the 60-minute picture, however, a run to 1.9075 would be expected.