By DailyFX - NZDUSD - Fundamental Take Dropping earlier in the session on an upbeat U.S. trade balance, Kiwi interest has been rebuilt going into the...

... Asian segment in spite of a
downside report on the manufacturing sector of the economy. Although
new orders maintained their levels compared to previous readings, dips
were seen in employment components. Contributing overall to the decline
to 52.3, the dip in employment contributes to nascent speculation on
pessimistic future prospects in the New Zealand economy. Subsequently,
price action is also reacting to announcements of a press conference
being held with Reserve Bank of New Zealand Governor Alan Bollard.

Greenback Strength
Expected to widen to $59.5 billion, the U.S. trade gap ballooned less
than expected by $59 billion. This places the August gap as the third
largest on record as higher oil imports contributed substantively to the
overall higher figure. Subsequently, the trade deficit with China rose
once again to a new record of $17.7 billion.

Technically Speaking
Bouncing off of the underlying support for the past week, the spot
price looks to rise as it breaks through the 78.6 percent fib from the
three day bear wave. Next stop for Kiwi bulls looks to be the 61.8
percent fib at 0.6936 with a subsequent test at 0.6951.

EURCAD

Euro zone Disappointment
Although several reports were released during the session, traders
decided to focus on the gross domestic product figures for the second
quarter. Anticipated to rise 1.1 percent on the yearly comparison,
economists may have been expecting a slightly higher figure as recent
economic data has been relatively optimistic. As a result, even in line
with earlier estimates, the data was received poorly as it douses
previous speculation on forthcoming interest rate hike considerations.

Surplus Narrows
Printing another monthly surplus, the merchandise trade balance for the
world's eighth largest economy narrowed slightly in August. Expected
to widen to C$6 billion, the actual figure was slightly lower at C$5.6
billion, additionally below the C$5.8 billion seen last month.
Subsequently, Statistics Canada revised the previous figure lower to
C$4.9 billion. With a slower rising surplus, central bankers may be
slightly hesitant to raise rates when they next convene next week.

Technically Speaking
Already looking to retrace, the currency cross looks to test the 38.2
percent fib after bouncing off of support at the 1.4023 level. Based on
the chart, a break through the 1.4193 level would see a test of the
1.4127 floor (50 percent fib from the three day bear wave). Any breaks
below would surely see further downside pressure in the intermediate
term.

USDCAD

Oil Declines On The Day
Crude oil contracts on the New York Mercantile Exchange dipped on the
day in light of recently increasing speculation over supply concerns on
this upcoming winter season. According to the EIA weekly inventory
report, U.S. stockpiles actually climbed for the first week in seven,
lending to the notion that current supplies remain lofty. Nonetheless,
despite the EIA report, overall sentiment may be siding with earlier
comments by the IEA on Wednesday and further supply concerns going into
2006.

Interest Rate Concerns
As a result of today's lower than expected merchandise trade balance,
traders pared back loonie positions on speculation that policy makers
will be hesitant when they convene next week. With anticipation of
another 25 basis point hike, coupled with rising prices of crude, the
Canadian dollar has become favored over the greenback with most of the
U.S. interest rate hikes already said to be priced in. However with
recently tepid data, excluding the positive housing starts figures,
sentiment may be shifting to a pause rather than a guaranteed rise in
short term rates.

Technically Speaking
Hitting resistance at the 1.1850 ceiling, the short burst experienced
by the cross may very well be short lived. As a result, the first
considerable test looks to be the 1.1759 figure (38.2 percent fib from
the weekly move). Any break below may see a test of the 61.8 percent
fib rather than a considerable contest at the 50.

By DailyFX