• AUD/JPY +0.7%
• NZD/USD +0.4%
• USD/JPY +0.4%

AUD/JPY

Aussie Still Strong Despite Data: Bidders reentered Australian longs on the session in light of mixed reports on the current economic state of the region.  Gross domestic product was somewhat lower than the expected, rising only 0.5 percent versus consensus expectations of a 0.7 percent climb.  Although still positive, the overall annualized figure remains relatively low compared to earlier estimates, increasing only 2.7 percent.  With growth now thinning out, market sentiment remains high that central bankers will keep interest rates at the current 5.5 percent measure.  Confirming the notion was an earlier report indicating that manufacturing conditions had weakened in the month of February.  According to the Australian Industry Group-PWC performance of manufacturing index, activity eased off 3.5 points to 46.7.  Below the 50 expansionary figure, the current read is suggestive of a slowdown in activity as domestic demand looks to have plateau.  Notably, new orders fell to the lowest reading since 2005.  Nonetheless, even with certain factors weighing heavily to the downside, longs remained bid as it seems carry traders prefer continuity in interest rate policy.  This should keep the underlying cross bid till further economic indications in favor of the yen arise.

Rumorville: Bidding at 0.7425 should keep the Aussie major leg bid through the asian session as further buying interest resides lower at 0.7410/15.  However, the boost looks temporary as heavy offers are above at 0.7465 and 0.7490.

NZD/USD

Technical Boost For The Kiwi: Rising on a more technical note, the underlying Kiwi dollar has been subject to much consolidation after the February debacle.  The underlying currency pair crash landed, taking the price down almost 350 pips in a month as the economic infrastructure remained concerning to the market.  Now, slightly overextended, interest seeking investors look to return in light of better than expected U.S. economic data.  In the dollarââ,¬â"¢s favor, individual spending rose in the month as a reflection of higher incomes garnered by individuals.  However, taking the cake, positive manufacturing activity was highlighted as it bucked previous negative area reports in Chicago and Richmond.  For the month of February, ISM manufacturing ticked higher against a 55.2 reading, rising above to 56.7.  The current read gave hope to downtrodden bulls as the recent report continues to suggest that the U.S. economy is still firing on all pistons.  Nonetheless, even with an addition of another 25 basis points, the Kiwi interest rate seems too good to pass up in the near term.  Looking to spur further New Zealand bias will be tomorrowââ,¬â"¢s commodity price report.  Should the report rise, expect rate hike notions to creep in.

Rumorville: With the dayââ,¬â"¢s spike higher, bids are running next to nil with plenty of selling interest looking to enter above at 0.6675 and higher.  Subsequent offers reside above at 0.6690 and 0.6710.

USD/JPY

ISM Manufacturing Bucks Area Reports: Dollar bulls were spurred on as inflationary pressures continue to loom over the worldââ,¬â"¢s largest economy.  With personal spending and income figure higher and a rise in manufacturing activity, dollar favoritism was boosted by the anticipated personal consumption expenditure figure.  For the month of January, the core figure rose in line with estimates.  Notably, however, the deflator, a gauge of inflationary pressure referenced by the Federal Reserve, rose above the previous monthââ,¬â"¢s 2.8 percent rise, booking 3.1 percent on an annualized figure.  Coupled with better than expected data, the deflator adds to current sentiment that the current tightening cycle looks to remain well into the second quarter.  The only piece of data countering this notion looks to be a decline in construction spending.  Rising only by 0.2 percent against a 1.1 percent expected, the figure simply suggests a cool down in what has been a phenomenal period in the sector.  All in all, further upside looks to remain for the U.S. single currency till further confirmation can be ascertained of an attempt at higher rates in the land of the rising sun.

Rumorville: Selling pressure resides at the top of the dayââ,¬â"¢s move with plenty of downside entries at 116.30 with further fund offers at 116.50/60.  However, countering the imminent downside, foreign buyers look to enter with interest at 115.45/50 with option related bidding at square figures, 115.25 and 115.10. 

Richard Lee is a Currency Strategist at FXCM.