Japanese Economy remains in deflation, as commodities surge. AUD breaks 91 cents.

U.S. Dollar Trading (USD) fell for a third consecutive session on Thursday weighed upon by poor data out of the U.S. Durable goods for the month of September failed to provide the greenback with any boost as figures were released at -1.7%, well below the forecasted 1.5%. Initial Jobless claims also came in higher than expectations at 331k. In other data news, New Home sales confirmed views that the housing sector continues on its downward spiral coming in at 770K, below the forecast of 780k. In U.S. share markets the NASDAQ -23.9 points (-0.86%), whilst the Dow Jones also fell -3.33 points (-0.02%). Crude oil surged to another record high on Thursday, jumping by US$3.50 to US$90.60. Looking ahead, the Michigan Sentiment survey rounds up the data week for the U.S.
 
The Euro (EUR) moved higher overnight as poor U.S. economic data did little to ease speculation of future rate cuts by the Fed. In specific data to the Eurozone, the German IFO index came relatively flat on consensus. Overall the EURUSD traded with a low of 1.4249 and a high of 1.4344 before closing the day at 1.4320 in the New York session.
 
The Japanese Yen (JPY) was range bound on Thursday ahead of CPI data released late in the week. Overall the USDJPY traded with a range of a low 113.89 and a high of 114.40 before closing the day at 114.27 in the New York session. CPI data released on Friday morning did little to ease views that the Japanese Economy remained in a state of deflation. With figures for the month of September coming in flat on consensus.
 
The Sterling (GBP) rose on a broadly weaker dollar, despite private reports showing that mortgage approvals in the UK for the month of September had fallen, stoking claims that the BoE may be resigned to cut rates in 2007. Overall the GBPUSD traded with a low of 2.0456 and a high of 2.0552 before closing the day at 2.0515 in the New York session. 

The Australian Dollar (AUD) edged higher, reaching fresh 23 year highs on bearish sentiment surrounding the USD, where it is viewed that the Fed may look to cut rates as early as Oct 31, whilst the RBA is likely to hike come November 7. Overall the AUDUSD traded with a low of 0.9013 and a high of 0.9090 before closing the day at 0.9082 in the New York session. The Aussie broke key psychological levels of 0.9100 in the early Asian session.  
 
The Canadian Dollar (CAD) approached a record high set in 1974 as demand for commodities increased and the U.S. dollar weakened against most major currencies. The USDCAD traded with a low of 0.9616 and a high of 0.9698.
 
The Swiss Franc (CHF) traded near a 2 1/2 year high against the dollar and rose versus the Euro as traders bet the Federal Reserve will have to lower borrowing costs to bolster economic growth, narrowing the interest-rate differential between the two countries. The USDCHF traded with a low of 1.1636 and a high of 1.1733.
 
Gold (XAU) was buoyed by a weaker greenback and a stronger oil prices. XAU traded with a low of 762.25 and a high of 769.25

TECHNICAL COMMENTARY

Euro 1.4335
 
Initial support at 1.4248 (Oct 25 low) followed by 1.4170 (Oct 23 low). Initial resistance is now located at 1.4350 (Oct 22 trend high) followed by 1.4369 (1.0410 plus 1.3360 – 1.3719)
                                        
Yen 114.15
 
Initial support is located at 113.78 (Oct 25 low) followed by 113.26 (Oct 22 low). Initial resistance is now at 115.04 (Oct 23 high) followed by 115.72 (Oct 18 high).
 
Pound – 2.0525
Initial support at 2.0454 (Oct 25 low) followed by 2.0304 (Oct 23 low). Initial resistance is now at 2.0574 (Oct 22 high) followed by 2.0624 (Jul 26 high)
 
Australian Dollar – 0.9110
Initial support a 0.9010 (Oct 25 low) followed by 0.8856 (Oct 23 low). Initial resistance is now at 0.9118 (O.8052 plus 1.1618 of the 0.7676 – 0.8335) followed by 0.9180 (This week’s open + last weeks’s range).
                                                                                
Gold – 771.80
Initial support at 745.60 (Oct 22 low) followed by 741.40 (Oct 11 low). Initial resistance is now at 774.90 (This weeks open + (last weeks range * 0.618) followed by 775.00 (Round number resistance)