By DailyFX - AUDCAD. A Fundamental Positive - According to the latest National Australia Bank Business Survey business conditions improved on the month led by increased...

... profitability
and an improved trading environment. Confidence among businesses rose 2
points to 6 in the month of September with the conditions figure adding
3 points to print at 11. Although considerably improved the latter
still resides below the June 2004 peak of 17 points. In light of the
optimistic figures, the survey noted a dip in employment factors.
Conditions have deteriorated as demand for labor and wages pressures
have declined slightly with a subsequent dip in future orders as energy
costs have risen on an annualized comparison.

Canadian Bulls Drive Cross
Increased speculation on forthcoming interest rates prompted traders to
bid the counter in the AUDCAD cross as the interest rate spread looks to
narrow slightly. Stronger than expected housing starts based on higher
employment prospects and earnings sparked notions that Bank of Canada
policy makers will opt to further increase interest rates as the eighth
largest economy spurs ahead into 2006. In addition, a resurgence in
crude oil prices contributed to Loonie strength, rising on the session.

Technically Speaking
Some retracement looks to have overcome the cross, albeit momentarily,
as the currency may have established a near term bottom at the
intrasession low. At this point, any tests to the upside looks to
include the 23.6 percent fib at 0.8870, previous support.

NZDUSD

In Similar Fashion
Much like the Australian survey but more pessimistic, economic
prospects were slightly to the downside in the New Zealand economy
according to the New Zealand Institute for Economic Research Inc. Fewer
companies were reported likely to hire workers or invest capital in
further plants and machinery in the near future bolstering the notion
that growth is expected to slow in the region. This is against the
current consensus that priced in the probability of further interest
rate hike decisions. Meeting October 27th, Reserve Bank Governor Alan
Bollard is expected to raise interest rates yet again to curb inflation,
bringing the benchmark to 7 percent.

Technically Speaking
Currently trading at the intraday low, the price action looks to break
near term support and lend to further downward selling pressure. In the
event of a bounce here, the first test would certainly take place at the
23.6 percent fib from the two day move at 0.6935.

AUDUSD

When Glenn Speaks, Traders Listen
Although an earlier business survey shed a positive light on the
Australian economy, traders pared back Aussie interest as future orders
and employment prospects look to potentially thin out in the near term.
Additionally contributing to the mild sell off was commentary by Deputy
Governor Glenn Stevens on the current condition of the economy. Warning
that inflationary pressures look to rise in the third quarter, Stevens
focused more concern over inflationary effects on global demand. The
deputy governor further mentioned that continually rising prices would
ultimately lead to crimped consumer demand and lessen overall foreign
demand and production, adversely affecting raw material need. As a
result, subsequent economies may be forced to raise interest rates to
cope with inflation against the Australian economy which would
ultimately leave rates at their current position if not consider rate
cuts on a dip in productivity.

Technically Speaking
Looking to consolidate, the Australian dollar major has seeming
established a temporary bottom near the session low. Any further moves
lower would ultimately reestablish near term support with upside tests
at the 23.6 percent fib at 0.7536. Any further moves higher may be
capped by the former support level at 0.7555.

By DailyFX