By DailyFX – EURCAD.Sluggish Canadian Sales.Canadian wholesale sales were down for the second time in three months as sales of household goods, machinery and chemicals… … declined according to Statstics Canada today.

Forecasted to rise 0.4 percent, the figure
dipped 0.1 percent and failed to compare to the previous month's 0.7
percent climb. Subsequently, inventories rose 1.3 percent in September,
lending to the notion that the economic region may be plateauing at the
moment. As a result, traders pared back Canadian longs in favor of the
Euro single currency in the cross as the lower numbers suggest a
plausible hold on rate increases in the near term future. Monday's
retail sales figures will provide greater clarity as dependant on
consumer spending activity.

Inflationary Pressures
Euro zone economic data was relatively in line with analysts'
expectations with the exception of German producer prices. For the
month of October, German prices on the producer level rose 0.7 percent,
crushing estimates of a 0.1 percent rise. This places the overall
annualized figure at a 4.6 percent pace and adds further to earlier
comments by ECB President Trichet that rates will have to be
“augmented”. Hoping for higher interest rates by December,
traders bid the single currency higher.

Technically Speaking
The EURCAD made another test of the three and a half year low at 1.3866
and made a strong double bottom in the process. With the bottom
forming, a long-term decending triangle is becoming more pronounced.
The failing top to the triangle is currently at 1.4065. This level is
also backed by a 38.2 fib of the early October peak to the recent low at
1.4057. The downside has little support to hold back a retest of the
1.3865/70 level. Either way, the constriction of the triangle will call
for action sooner or later and only one side can win in the push.

EURJPY

European Central Bank Stuns
Signaling that the European Central Bank is ready to consider an
interest rate hike at its December meeting, President Jean Claude
Trichet stated plans to “moderately augment the present level of
intervention rates” as he spoke in front of the European Banking
Congress in Frankfurt. This is contrary to what experts have called
for. Raising interest rates now may jeopardize the current turnaround
in the euro zone economy by raising the cost of money for many
individuals and corporations. Even though detrimental to the overall
economy, traders bid the single currency higher as the raise would mean
a 25 basis point increase on instruments offering fixed payments.

Nothing New
Taking into consideration government pressure, the Bank of Japan left
monetary policy loose in the world's second largest economy as
concerns over persistent deflation continued. Electing to leave the
target range for liquidity at 30 to 35 trillion yen, policy makers
reiterated the need for a rise in consumer prices in order to confirm
the end of deflationary pressures before any tightening measures can be
considered. Additionally, Fukui fortified relations with the central
government saying, “the government and the BOJ may have different
areas of policy management, but there is no difference in the basic
view.”

Technically Speaking
The 73.6 fib at 140.23 seems to be the resting point for Euro bulls
after a two day rally. This level happens to coincide with a resistance
level in late Octover which flipped to support a few days later, so its
validity as a significant resistance is not in question. However, if
another bout of euro bidding can move the pair beyond the level, a
smooth move to 141.20 can be expected. However, the way back down is
fraught with multiple swing lows and a confluence of fib levels. The
nearest support is the 61.8 fib of the same retracement as above that
falls at 1.3975/80, which also shares this level with multiple support
and reistance levels.

USDJPY

Consolidation Pressures
In line with consensus expectations, central bankers maintained their
zero interest rate policy today as deflationary pressures persist in the
economy. However, countering what otherwise would be considered dollar
bullishness, traders pared back long positions after gains in the
overnight. Looking forward, traders will be gauging the convenience
store sales and tertiary industry index data. A gauge of consumer
spending, store sales would offer some confirmation to continued
domestic demand while the tertiary would suggest increased activity in
the service sector as a result of growing expansion in corporate Japan.

Technically Speaking
Dollar strength seems to be endless in the USDJPY pair with important
technical levels just stepping out of dollar bulls' way. The recent
fresh two-year high set in the pair at 119.59 holds little relevance, so
another dollar run sill meet little in the way of resistance beyond the
this level until the July 2003 high 120.75/80 comes into veiw. The
downside is well in forced however. The former long-term 50.0 fib level
at 118.45/50, which held as resistance for a short timer, will be a good
rallying point for a dollar resurgance.

By DailyFX