• AUD/USD +0.5%
• AUD/JPY +0.5%
• USD/CAD -0.3%

AUD/USD

Rate Speculation Fuels Higher Aussie Climb: Australian business confidence supported by the National Australia Bank  Ltd, remained bolstered in the month, rising to a 17 point reading in the month of March compared to the 15 points seen in February.  A gauge of expected conditions in the coming month, the survey climbed higher as businesses have become increasingly optimistic of the near term future as the Reserve Bank of Australia elects to keep benchmark lending rates steady.  Subsequently, the surveyââ,¬â"¢s results are now above both the 2005 average of 6 and well above the longer term average of 9 points suggestive of improving times.  This has bolstered the carry trade momentum seen yesterday as the regionââ,¬â"¢s single currency continues to offer a comparatively higher rate against the U.S. dollar, even as Fed tightened is assumed to continue.  However, gains on the dayââ,¬â"¢s move look prematurely capped as an option barrier keeps further gains under wraps at 0.7350.  Further AUDJPY bidding is contributing to the major climb with speculation that rates will likely move higher in August should inflationary data keep up with growth prospects.

Rumorville: With the aforementioned option barrier keeping the underlying spot restrained at the moment, both selling and buying interests reside thinly around the exacted figure.  Bids donââ,¬â"¢t come into play until the 0.7300 handle with corresponding stops slightly below.  Further bidding looks to mount should the figure break at 0.7260 and 0.7265.

AUD/JPY

Uridashi Issuance Helps AUDJPY Cross: Remnants of interest rate speculation boosted the carry trade candidate, the AUDJPY cross pair, throughout the day.  However, in similar fashion to the AUD major, the cross looks under pressure ahead of the 0.7350 option barrier heading into the Asian session.  This has kept the current appreciation restrained as the price action tested the ominous 0.8700 figure earlier on and failed.  Nonetheless, with the Bank of Japan looking to keep rates at the current zero interest offered and better than expected business confidence in the Aussie region, a test above to the 0.8750 looks feasible.  Additionally boosting Aussie favoritism on the session were reports released by the World Bank on a launch of A$656 million uridashi that is keeping the exchange favored as well as still lofty silver, copper and gold prices.  Should commodities press higher in the near term, likely tops would not emerge till the 87.50 technical figure and the 87.82 figure (78.6 percent fib from the Feb ââ,¬â"¢06 ââ,¬â€œ April ââ,¬â"¢06 move).

Rumorville: Further bidding looks inevitable on the afternoonââ,¬â"¢s momentum as we approach the critical 87.00 handle.  As a result, profit taking intent looks heavy above the current spot at 86.99 with numerous offers.  Coincidentally, the level is in line with the current top of the ichimoku cloud.

USD/CAD

Iran Takes Center Stage In Lifting Loonie: Canadian dollar data exacerbated the currency pairââ,¬â"¢s fall as rising Canadian housing prices boosted expectations of near term rate cut.  Climbing by 7 percent on an annualized comparison, the figure is likely to trickle into the consumer level as the regionââ,¬â"¢s consumer figures remain optimistic and the labor force continued to be tight.  Sparking the sessionââ,¬â"¢s move looks to be a heightening of geopolitical tensions as it was established today that Iranââ,¬â"¢s program had succeeded in enriching a small quantity of uranium.  The results called for further enrichment expansion with the program estimated to grow considerably on the success.  As a result, commodity contracts were bid higher on a safety of funds flight.  Traders bid copper higher with gold bullion already flirting with an above $600 level on the month.  The pair looks bottomed out currently as profit taking looks to keep the currency steady as we head into the Asian session at 1.1430.  Expected tomorrow will be a narrow U.S. deficit and a dwindling Canadian surplus, lending to a potential short term pullback on todayââ,¬â"¢s profit taking.

Richard Lee is a Currency Strategist at FXCM.