• NZD/USD +1.0%
• USD/CAD -0.5%
• GBP/USD +0.5%

NZD/USD

Kiwi Bid Up Ahead of Consumer Price Report: Kiwi opened up higher at the New York bell as overnight highs were taken out above the 0.6278 on triggered stops and follow through buying from sized Japanese accounts and fund bidding.  Keeping the underlying major bid, however, was the lower than expected U.S. housing sector numbers.  Falling 7.8 percent, the dip in housing starts lends to speculation that interest rate tightening may be at an end.  The notion was exacerbated with suggestions reported by the Federal Reserve minutes which showed contemplation on the necessity and subsequent end of the current tightening bias.  This now may shift the consensus towards the weakened U.S. infrastructure a day after foreign partners showed considerable interest in American assets.  Additionally underpinning kiwi strength looks to be high anticipation of tonightââ,¬â"¢s consumer price figures.  Expected to rise 3.4 percent annually, the report may lend to speculation of the need for further rate hikes.  Should the report rise above 3 percent, it would be above the current 1-3 percent band earlier established by the Reserve Bank of New Zealand.  On capital flows, considerable AUDNZD cross selling is adding to the buyside for the major heading into the Asian session.

Rumorville: Option protective selling looks to emerge around the barrier at 0.6290 and 0.6310.  Although the exotics are expected to roll off next week, traders can anticipate considerable interest in keeping within the aforementioned level.

USD/CAD

Commodities Prop Up Loonie: Canadian interest picked up, forcing the underlying loonie past the pairs lower range trendline.  Subsequently, the pair disregarded the dour new vehicle sales figures for the Canadian region and sided with higher commodities and lower housing start figures in the U.S.  Bolstering the loonie looks to be the May crude oil contract as the interest propped the price higher, taking out post Katrina highs at $70.85.  Notably, further upward pushes seem likely as the current level of crude doesnââ,¬â"¢tââ,¬â"¢ seem to be adversely affecting production for the worldââ,¬â"¢s largest economy.  Copper has also pushed higher to 17 year highs as silver and sugar continue on previous momentum.  These are subsequently, underpinning strength in the TSX composite, boosting further interest in domestic equities.  However, further downside may be capped with stops hinted at just below the 1.1400 figure ahead of the Asian session and tomorrowââ,¬â"¢s securities transactions report.

Rumorville: Continued selling pressure is eyed on a pullback to the 1.1435 and 1.1470 figures with stops below the 1.1400 figure likely to exacerbate a push slightly below the psychological figure.

GBP/USD

Traders Look To BOE Minutes: Traders continued to bid the pound sterling higher on disappointing U.S. data with many participants eyeing the 1.7800 handle as key for further advances ahead of the NY close.  Next up for the major currency pair looks to be the overnightââ,¬â"¢s release of the Bank of England minutes.  Although the vote is expected at 7-1, further emphasis will be placed on any rate suggestions, especially with inflationary data left to be released later on in the week.  Expected to rise in line with previous consensus figures, price increases may be limited once again, simply a reflection of higher commodity prices and not consumer based increases.

Rumorville: Further bidding may surface should the price action pullback below the current spot to 1.7680 with further interest below at the 1.7650 figure.  Slightly below, stops are residing and may ignite a correction should there be a squeeze.

Richard Lee is a Currency Strategist at FXCM.