USDJPY – rates in the near term future…. …

The trade
balance for the month rose to a record $66.1 billion on rising imports
and a higher volume of petroleum and petroleum products. Coupled with
lofty energy prices, the figure crushes the previous record of $60.4
billion set in the month of February. Lending to the dollar push,
traders linked most of the increase to the devastation from Hurricanes
Katrina and Rita. Shutting down oil refineries in the Gulf region, the
hurricanes forced consumers to increase their demand from other sources,
namely foreign countries outside of the economy.

Dour Data ForJapan
The sole release for the session, traders observed a larger than
expected dip in the most recent machine orders report. Expected to dip
6 percent in the month of September, the release declined 10 percent and
reversed the 8.2 percent rise in the previous month. Known for its
volatility the figure was lightly regarded on the session with most of
the focus being turned on expectations of the upcoming gross domestic
product report. Expected to to show a 0.1 percent rise, the figure
contributes to the notion that growth slowed in the recent months
leading up to September. This now places the annualized figure below
the previously witnessed 2.5 percent to a 1.7 percent expansion.

Technically Speaking
Taking into consideration the recent fundamental bias, plenty of upside
room remains for the major currency. Bouncing off of the 38.2 percent
fib level at 116.96, the underlying price action looks headed to test
the upper trendline of the longer term channel. Capping doesn't look
probable till the 118.50 ceiling.

AUDCAD

Aussie Inflation Looks To Be Contained
Today's economic releases lend to the notion that the Reserve Bank of
Australia may not be as forthcoming with interest rate increases as
widely expected. The Australian Bureau of Statistics reported a decline
in employment for the month of October, to the tune of 19,800. Falling
lower than the expected 15,000 gain, this is the second consecutive
month of declines, the first time since June and July of 2003. As a
result, the unemployment rate increased to 5.2 percent and suggests a
softening of the previously tight labor market. Inflationary pressures
also seem to weaken, expected to be contained in 2006. According to the
Melbourne Institute, consumer inflation expectations for the November
survey rose to 21.7 percent. Increasing from only 15.3 percent the
previous month, inflation is widely expected to remain within the
RBA's 2-3 percent benchmark target.

Carry Traders Corner
Even with the overnight cash rate expected to stay at 5.5 percent,
traders bid the cross higher as carry trade potential still remains with
a differential of 250 basis points. Given the above inflationary
expectations, however, look for the cross to continue its range bound
environment in the near term as traders weigh rate expectations in both
economies. Adding to downward pressure on the loonie, oil prices
receded today on a pessimistic IEA energy report. The international
agency stated that crude oil demand looked to be curbed in 2006 for the
fourth consecutive month as refinery activity looks to also rebound in
the Gulf region. The front month contract finished down at $57.66.

Technically Speaking
Continuing the staid range environment, the pair looks to be subject of
a interest rate tug o war. As a result, expectations for the cross to
remain in the current range run high as the short term move looks to be
capped by the previous support at 0.8688, the 38.2 percent fib level.

EURUSD

Dour Data For The Euro zone
Multiple reports released on the day reflected the trying times of the
euro zone economy. First and foremost, economic figures were rather
disappointing out of the French economy. Industrial production rose
less than expected at a paltry 0.2 percent as consumer price inflation
declined 0.1 percent for the month of October. The recent figures
contradict, at least in the short term, statements by policy makers that
inflation persists in the region, leading to higher interest rate
potential. Additionally contributing, policy makers in Germany, the
region's largest economy, passed new tax legislation into effect.
Angering business owners and corporations, the coalition government
raised the Value Added Tax from 16 to 19 percent in addition to raising
the 3 percent “wealth tax” in efforts to reduce the budget deficit.
The latest move by the new government has prompted experts to dub the
future as an “economic disaster” as the tax would most likely curb
domestic spending in a time when consumption remains thin.

Technically Speaking
Continuing on the downward channel that has existed over the past few
sessions, further selling pressure looks to ensue as the near term
support level has been broken at 1.1711. Finding a temporary bottom,
the break coincides with further continuation of the aforementioned
channel with no hopes of cappage until the 1.1600 figure. Near term
upside swings would be tested at the previous support.

Sending money abroad? Converting currency?