Dollar markets lost ground on the day with traders paring back positions and flying for the safe haven Swissie.During… … an early
afternoon press conference, the Bush administration made official
mention of the candidate receiving their full backing, former Fed
governor Ben Bernanke. Currently serving on the President's Council
of Economic Advisors, Bernanke's current position was seen as a
precursor to the top spot in similar fashion to when incumbent Chairman
Greenspan served under President Ford in the same capacity. Although
noted as a staunch inflation fighter, uncertainty still surrounded
Bernanke's ability to adequately govern the board in line with
Greenspan's past performance.

In Addition
Further declines in the currency pair past the 1.2900 figure were
exacerbated through notable suggestions of potential Yuan revaluation in
the near term with a slide in the U.S. bond markets. Subsequently,
further speculation looks to ride the upcoming consumer confidence
data.

Technically Speaking
With a golden cross forming above the 30 reference level, upside looks
to be in the works for the near term given the resiliency of dollar
bulls at the 50 percent fib level. Currently hovering the 1.2873
figure, upside resistance looks to come from the formidable 38.2 percent
fib at 1.2922 with a break to the downside being capped at the 1.2825
floor.

USDJPY

Yuan Revaluation Speculation
Traders pared back long held dollar positions on the session after
statements by a Chinese central bank advisor suggested further changes
in the central bank's revaluation efforts were inevitable. As a
result, traders remembering the 2 percent slide in the major pair
attempted to take advantage of the failed test to break through
resistance at the option related 116 level. Additionally bolstering
downside pressure on the major pair was notice of a major banking
unloading a billion in Yen. With the Japanese currency acting as a
proxy, continued notice of revaluation efforts look to add to short term
strength.

Fundamentally Speaking
Contributing to overall optimism of the region, nationwide department
sales for the month of September rose 0.8 percent against the previous
decline of 0.7 percent. Additionally, supermarket sale declines slowed,
falling only 1.9 percent compared to the previous 2.9. The most recent
figures to come out of the world's second largest economy, the reports
bolster previous notions of yen strength. As a result, traders will be
anticipating data pitted for release at the end of the week which
includes industrial production and consumer price reports.

Technically Speaking
Failing to break the option related ceiling at 116, the major pair
declined on the day. Noticeable was the double top formed shortly after
the European open as the price action broke through the 23.6 fib level
at 115.45. Finding a temporary bottom at 115.12, the price has bounced
back, hovering the 115.50 figure. Although the downward trend seems to
be strengthening in the near term, look to each floor in providing a
rough decline.

GBPJPY

We'll Pass
Housing price data released today set back speculators that were
bidding up the Pound in anticipation that a possible rate cut in
Novemeber would be passed. Indicators released over the past weeks have
lent themselves to talk that inflation is making a return appearance on
the economic front. Retail sales in September rose for a second month
to tip the scale on seperate reports showing consumer prices rose to
their highest level since being recorded and housing prices fell to
slowest pace in 14 months. Today's data is another hit to the housing
sector and a blow for overall inflation expectations. At the last
meeting on October 6, all nine MPC members voted to keep the benchmark
rate at 4.50%. Further cuts tarnish this currencies' value as a carry
trade against the Yen's near zero yield.

Technically Speaking
Friday's price action brought the pound to an 18-month high against the
yen, but the quick retrace off of this level seems to say that a move
higher is not meant to be. To breach the 205.40/66 level, a surge in
pound bids would have to rejuvenate the two week rally that began on the
11th of this month. The more likely scenario has the pair continuing to
make its way down to 203.16 which is the 38.2% fib of the recent run and
the high level that contained the last runup.

Sending money abroad? Converting currency?