CAD/JPY

All Eyes On Crude Oil:  Oil was once again the topic of the session as tropical storm Rita bears down on the Florida Keys, prompting mass evacuations of the area.  With 10 percent of U.S. capacity affected by Hurricane Katrina after the shutdown of eight refineries in the area, traders bid the commodity higher on the probability the same will happen should the storm pickup in strength.  As a result, crude oil was bid higher at $67.11.  Additionally, on the eve of the OPEC conference, oil was bid higher as OPEC nations look to agree on an unchanged quota going into yearend.  Although earlier speculation had risen on an addition of 500,000 barrels a day, general sentiment now resided with the unchanged notion as officials have noted that supply is currently favorable with supply concerns being heightened on refinery issues.  Comparatively, with oil prices rising and no economic data, markets were closed today in Japan, the counter yen suffered on the day.  Rising oil prices are feared to be detrimental to currently teetering consumer spending.

Benchmark Indexes:  Canadian dollar bulls bid the currency higher in addition to increased interest in domestic equities.  Foreign investors bought $3.3 billion in Canadian stocks, the largest investment of the year in July.  As a result, the S&P TSX benchmark index rose to fresh five year highs.

Technically Speaking: The recent rise looks to be temporarily exhausted as we see consolidation at the 95.44 level.  As a result, a divergence has emerged lending to near term retracement potential in the MACD with a subsequent death cross in overextended territory in the Stochastic.  Downside floor tests will take place at 94.84 (23.6 fib from the three session move) and 94.44 (38.2 percent fib).

EUR/CAD

Political Tensions Abound:  Staid action in the euro zone domestic currency major lent to near term Canadian strength on oil supply concerns and optimistic investment in the world's eighth largest economy.  Attributed to the flat euro currency market action were overnight results from the German general elections.  Pitted to favorably win early on, the opposition leader Angela Merkel is now faced with the reality that a coalition with her respective Christian Democratic Union and the incumbent Chancellor Gerhard Schroeder's Social Democratic party is a must, even marginally winning the majority in both categories of seats and poll figures.  As a result, with market participants seeing the potential for financial reform effectively dwindle, euro shorting ensued early on.

Bank Of Canada Action:  With stock market valuations higher on the year, speculation has now been sparked that higher interest rates may be needed given future inflationary pressures.  However, with domestic demand still teetering, Governor David Dodge may not be as forthcoming till domestic figures begin to pickup.

Technically Speaking:  Similar to the move seen in the CADJPY currency pair, the current move seems to have been exhausted as consolidation takes place in the underlying.  With that said, an identical golden cross looks to act as a confirmation of the test higher at 1.4258 (23.6 percent fib from the two session move).  Considerable ceilings exist at 1.4315/25 on previous consolidation.

AUD/CAD

Political Implications:  Similar to European action, Australian general elections took place over the weekend with some instability ruling over the current situation.  Breaking the 30 percent barrier on primary votes for the first time in Australian electoral history, Sam Byrne of the New South Wales Greens party received 40 percent of the primary vote to win in a Labor party absent competition.  This creates a potential adversary against the larger known Labor Party and has sparked speculation of a party defeat in 18 months' time.  Although a bit off, a year and a half, the outright competition has thrown incremental instability in an industrial government, adding some downward pressure on the Aussie major.

Technically Speaking:  Breaking below the 0.9053 support level, the currency has since consolidated and bounced off of the session low of 0.8934.  However, in similar fashion to the previous crosses, a golden cross is forming, suggestive of a near term retracement.  The first line of defense for bears looks to be 0.8979 (23.6 percent fib from the three session move) with a formidable resistance at 0.9007 (38.2 percent fib).