By DailyFX - EURAUD.Politics Takes Front Seat.In a somewhat expected move following a meeting Sunday, incumbent Chancellor Gerhard Schroeder elected to step down leaving Angela Merkel the...

... newly elected chancellor of Europe's largest economy. Finally
ending the three week standoff since the general election, Merkel stands
to be the first woman chancellor in German history with coalition
concessions to the incumbents political party, Social Democrats. More
specifically, eight positions will be given to SPD officials in Finance,
Foreign Policy, Justice, Development, Labor and Social Security, Health,
Transport and Environment Ministries. Notably, this now places
Wolfgang Clement in the outgoing government with his successor being
former conservative chancellor candidate Edmund Stoiber.

Fundamental Outlooks
Although the end of the political standoff did alleviate some
uncertainty in the euro zone, fundamental data released during the
session added some further downward pressure on the underlying currency,
reversing earlier sentiment. Notably on the day, Germany's current
account surplus narrowed from the 7.3 billion euro sum last month.
Smaller at 2.5 billion, the surplus looked to be narrowed on exports
rising 3.5 percent higher while imports soared 6 percent higher.
Additionally, French industrial and manufacturing production were
relatively in line with earlier estimates.

Technically Speaking
The underlying cross currency looks to have established a temporary
bottom right above the previous support of 1.5850. Lending to the
notion of further upside potential looks to be the peak above 30 in the
RSI. However, a break above the near term ceiling at 1.5900 will be
required before any potential can be realized.

AUDJPY

September Business Survey Anticipation
Anticipating an optimistic report, traders bid the underlying Aussie
major ahead of the National Australia Bank September Business Survey.
Expected to feed further positive good vibes of the land down under, for
the first time in a year, the report is expected to reflect growing
optimism of the approaching holiday season by business executives.
However, there still remain ongoing concerns over the increasing cost of
crude oil and energy prompting a good percentage of retailers in being
simultaneously cautious. Additionally, traders will be scouring any
figures or innuendos that may prompt further hawkish considerations by
the RBA. Last week, the Reserve Bank of Australia left interest rates
at their current level.

Bank Of Japan
Policy makers entered their two day meeting in order to further
evaluate current economic conditions in the world's second largest
economy. Although expected to not move on rates from the current zero
standing, traders are going to be scrutinizing any indications that a
shift in monetary policy may be coming sooner than later. Consensus
expectations are looking towards the end of the fiscal 2005-year in
March as the earliest possibility. Even with retail sales, consumer
confidence and capital spending on the rise, central bankers look to
remain steadfast on their prerequisite of consecutive months of price
increases before considering the aforementioned.

Technically Speaking
After testing the 61.8 percent fib from the near term move, the
currency cross is consolidating between 86.70 and 86.51 (50 percent
fib). With the oscillator favoring the downside, peaking below the 70
figure, a confirmed break below the current floor would lead to an
imminent test of the 38.2 at 86.32.

AUDCAD

Rate Considerations
With optimism regarding the anticipated business survey, traders may be
looking for further carry trade notions in the currency cross.
Currently standing at 5.50 percent, short-term interest rates may rise
again if inflationary considerations remain high in the region, as noted
by some economists.

Oil Focus
Recently dipping further at the start of the week, oil prices have
since declined from their lofty $70.85 highs on August 30th. What may
cause speculation of a resurgence is the oncoming fall season in the
northeast. A time known to drive prices higher, supply concerns coupled
with current production bottlenecks may bolster prices once again,
leading to a test in the underlying Canadian major. However, until
then, light economic data may not boost the currently consolidating
loonie.


By DailyFX