With BoE minutes out of the way traders will use the rest of European session to position

With a light economic calendar, the market will be watching US releases intently.

MAJOR HEADLINES – PREVIOUS SESSION
US

With economic indicators on the light side today ,  the market will be looking at leading US indicators and Philly Fed for USD guidance. The Philly fell off the map in September from 18.5  to -.4 so this rebound could spark a renewed USD rally. Note, after the surprise drop in Industrial Production, (which was not factored into Philly Fed Bloomberg poll estimates) there is significant downside risk. Should both the leading and Philly reveal figures which continue point to a ‘soft landing’ in the US, we should see EURUSD test the critical 1.2500 support levels near term and USDJPY 119.00 resistance level.

NZD

According to Bloomberg and Reuters data NZD0.795bn worth of Kiwi-denominated notes are coming due today. Rough estimates indicate that 56% are being redeemed. While no one is expecting massive NZD selling on the open market, we could see a gradual decline in the NZD. Oct. 26th RBNZ rate decision will be critical for the NZD.

GBP

We are seeing  pound  weakness on back of disappointing  retail sales data (-0.4% vs 0.4% exp mom)  along with yesterday's decline in wages (4.2% vs 4.4% exp),  which is a very consistent inflation gauge for the BoE.  The declining prospects of a 2006 hike should weigh on cable through the week.

THEMES TO WATCH – UPCOMING SESSION
FX Order Book

Euro/US Dollar    

EURUSD  (1.2564 @ 10:33 GMT)

Support:

1.  1.2460 daily base which coincides with 1.2465 38% retracement

2.  1.2320 double top form march 2006

3.  1.2260 bull trend line from March 2006

4.  1.1635 38% retracement (0.8350-1.3667), also low from 2005.

Resistance:

1.  1.2635 old wave support from September 2006.

2.  1.2764 high from October 2006.

3.  1.2940 old top from August 2006.

4.  1.2980 long term inverse head-and-shoulder target.

 Resist.

1.2645

1.2588

1.2560

1.2564

1.2503

1.2474

1.2417

Support

British Pound/US Dollar    

GBPUSD  (1.8685 @ 10:33 GMT)

Support:

1.  1.8520 lower end of the bear channel from early August 2006.

2.  1.8500 daily base support.

3.  1.8090 wave support from July 2006.

4. 1.7330 long term bull trend support from 2001.

Resistance:

1.  1.8705 old top from October 2006.

2.  1.8775 old wave low from mid-August.

3.  1.8900-5 top from early October along with 615 retracement (1.9072-1.8632).

4.  1.9145 Old top from August.

 Resist.

1.8849

1.8772

1.8725

1.8685

1.8648

1.8617

1.8539

Support

Australian Dollar/US Dollar    

AUDUSD  (0.7559 @ 10:31 GMT)

Support:

1.  0.7470 wave low from mid-September.

2.  0.7405 base on daily chart and low from October.

3.  0.7270 July lows.

Resistance:

1.  0.7580 lower end of the range from August/septmber.

2.  0.7715-20 top from late August.

3.  0.7795 2006 highs.

 Resist.

0.7606

0.7574

0.7562

0.7559

0.7529

0.7509

0.7477

Support