By DailyFX – USDCAD – Consumers To The Rescue.Higher Canadian retail sales figures lent to further speculation that short term interest rates will be on… … the rise in the near future as Governor David Dodge remains preventive of creeping inflationary pressures.

Contrary to previously released growth figures, consumer
spending remains buoyed in the world's eighth largest economy as
consumers increased purchases of automobiles. However, notable was the
decline in the core component, which excludes the auto purchases. For
the third quarter, retail sales actually dipped 0.3 percent. Less than
the expected 0.4 percent estimated decline, the dip follows the 1.7
percent surge seen last month. Nonetheless, the economy remains
expansive at a healthy pace and as a result, will likely need further
rate increases to curb potential inflationary pressures. Subsequently,
traders re-initiated long positions in the loonie as a 25 basis point
raise seemed forthcoming.

Technically Speaking
Dollar momentum died after a retest of the 1.1747 resistance ceiling
built over the past 24 hours. As a result, the 23.6 percent fib level
at 1.1697 led to a minimal barrier with short consolidation occurring at
1.1662 (38.2 percent fib level from the weekly move). Already
penetrating below the fib level, the subsequent 1.1633 figure test looks
imminent before any upside shift can be considered.

AUDCAD

Downside For The Bloc
Combined with today's positive Canadian dollar data, the loonie
garnered strength from a mixed report by Westpac-Melbourne Institute's
leading index of economic activity. Although rising in the month of
October by 0.5 percent, the report included the fact that growth in the
Australian economy had slowed from the second quarter. Recovering in
the month of June to a 4.7 percent expansion, the growth pace in the
economy looks to finish approximately at 2.5 percent for the year of
2005. Subsequently, domestic spending looked to plateau and dip
slightly in 2006 leading to further declines in the overall expansion.
The figures are not too far off from tonight's release of New Zealand
gross domestic product. According to Statistics New Zealand, the
economy grew a paltry 0.2 percent after expanding by 1.1 percent in the
second quarter. Bearishness abound, the region's expansion looks to
be placed on hold with no further positive monetary tightening in the
near future.

Technically Speaking
Continuing on the overall downtrend channel, the price action is
consolidating ahead of the 0.8540 figure. Upside tests reside at
previous support floors at 0.8583 (23.6 percent fib level) and 0.8610
(38.2 percent fib level). Subsequently, formidable resistance lies at
previous consolidation above the 0.8610 figure and may cause a failure
of the momentous test. Although downside considerations are plentiful,
upside notions remain as the current consolidation forms around the
lower trend line.

EURCAD

Euro Weakness Abroad
Bearish momentum remains from the instability of monetary situation in
the economy of Italy as positive data from the U.S. sparked further
greenback momentum. Consumer spending in France doubled estimates by
rising 1.1 percent while hourly wages remained strong in the Italian
constituent. However, none could beat the might of the 4.1 percent
growth witnessed in the world's largest economy for the third quarter.
Rising the most in one and a half years, the current rate of expansion
lends to confirmation of at least one more 25 basis point rate hike come
next year. Additionally, the GDP Price Index, a measure of inflation,
rose higher than expected at a 3.3 percent pace. With interest rates to
rise, at least one more time, traders continued in their attempts to
capture the widening interest rate differential. Ultimately, with
broader euro weakness and an optimistic interest rate environment in
Canada, the currency cross was yet another reflection of euro weakness.

Technically Speaking
Breaking through rangebound consolidation in the overnight, the EURUSD
currency pair has knocked out support levels at 1.3878 (38.2 percent fib
level from the weekly bear wave) and 1.3838 (23.6 percent fib level).
Currently consolidating, further downside momentum looks to be in the
works with subsequent floors at 1.3750 and the psychological 1.3700
figure.

By DailyFX