rates continually on the minds of market participants,resurgent buying underpinned Kiwi dollar strength… … in the overnight.

According to Statistics New Zealand wages rose 0.8 percent higher as
employers were forced to pay rosier wages in the face of a labor
shortage. Increasing wages look to bolster further consumer spending in
the economy and ultimately lead to further expansion in the region.
However, with higher expansion and growth, inflation is expected to once
again loom, forcing further considerations of a rate hike by policy
makers come December. Reserve Bank of New Zealand Governor Alan Bollard
raised the official cash rate to 7 percent last month in order to curb
already lofty consumer prices. With anticipation of further tightening
and a widening interest rate differential, traders bid the underlying
currency higher.

Dollar Weakness
Additionally lending to the directional shift, traders pared back long
dollar positions, taking profits from recent strength. Notably, there
has been increased bid interest of U.S. denominated assets. On the
session, 10-year notes were higher as the yield reached 4.66 percent.
Since then interest has bucked the three week downtrend pushing the
yield lower to 4.56 percent.

Technically Speaking
After hitting stops below the 0.6750 support, the price action has now
climbed above to test the 23.6 percent fib level at 0.6822. Currently
hovering, near term support looks to hold, suggesting continued upside
as we enter the Asian open. The next ceiling should be tested at the
38.2 percent fib level at 0.6878 where previous consolidation also
occurred.

EURJPY

Rising Riots Add To Downward Pressure
Although further profit taking mounted on the session as carry traders
pared back positions to lock in gains, escalating violence in the French
riots has placed some unwanted pressure on the euro single currency.
New updates have revealed the implementation of a curfew and a call on
police reserves by the government. However, even more pessimistic is
that fact that the riots reflect a deteriorating infrastructure exposing
sluggish growth and an unresponsive government. Ultimately, coupling
these two themes, further downward pressure may be exerted dependant on
the duration of the current situation.

Again, Yuan Speculation
Further yuan speculation disseminated throughout the market as traders
entertained the thought of further, if any, revaluation efforts prior to
the U.S. President Bush's visit to the region on November 18th. With
most expecting a widening of the trading band the likely scenario, such
a move has potential following earlier comments by Treasury Secretary
Snow. At the start of the session, Snow had pushed once again for China
to continue it's efforts in bolstering a flexible yuan.

Technically Speaking
Finding a bottom near the 137.65 support, the cross currency is
hovering the near term 138.00 figure. At this point, a penetration
below would certainly set up for a test of the October 19th spike low.
Should bullish strength in the cross be revitalized, a temporary test of
the 23.6 percent fib at 138.59 would be inevitable. However the
duration looks to favor the bears should downside be sparked.

CHFJPY

Swissie High
Establishing a fresh yearly high of 1.3170, the Swiss Franc was subject
to a bit of profit taking on the day fueling previous declines in the
cross currency at the onset of the week. Downward pressure on the euro
single currency in the face of escalating riots spilled into the Swissie
leg as traders now mount focus on the upcoming U.S. trade balance being
released this Thursday. Expected to rise to a deficit of $61.3 billion,
the release, and subsequent negative sentiment, would be the highest on
record and compete with HIA related corporate repatriation activity
heading into the last month of the year.

Technically Speaking
Hovering near term support at the 89.30 bottom tested on October 24th,
the cross currency seeks a topside test of the 89.30 figure, 61.8
percent fib from the Oct. 14th-Nov. 5th move. Consolidative action
could lead to a penetration above to the 50 percent fib at 89.87 with
any further downside dips being capped at 88.95.

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