The New York session saw the dollar consolidate most of its losses from yesterday against most currency pairs with the exception of GBPUSD and USDCAD.  GBPUSD continues to defy gravity.  The pair was trading just below its highs for the day when New York got going.  We then had the Bank of England leave interest rates unchanged.  The market had been pricing in a slight chance of an interest rate cut by the BoE.  GBPUSD rallied after this announcement to take out the overnight highs and then make new multi-decade highs near the 2.1115/20 area.  The market took the no change decision to mean that the economy is still growing and that the BoE may have to raise interest rates at their next meeting. All eyes will be keying in on upcoming UK data.  Should the upcoming data surprise to the upside watch for GBPUSD to take off once again. Buckle in GBPUSD lovers.  USDCAD managed to keep most of the gains it made from the lows in New York yesterday. We saw New York players try to take the pair back up to the Asian highs near .9395/.9400. It looks like the correction in this pair could be related to the price action in gold. We see that gold has put in a double top on the daily charts and if you remember yesterday's NY session update we mentioned that the daily USDCAD chart put in a major bullish reversal signal. Should the technical scenario of a lower gold unfold we could see USDCAD continue its correction.  With the market positioned extremely short in USDCAD profit taking rallies can be fast and furious.  For the trader who is positioned correctly into these rallies the opportunities can come quickly so be on the lookout for those snap backs.

The Asian session looks as if there is not much on the economic data front to spur the markets on.  Be on the lookout for further signs of credit issues or more rhetoric out of China in regards to diversification of currency reserves. Events like these occurring on an Asian Friday can have the markets whipped into frenzy.

Upcoming Economic Data Releases

  • 04:30 GMT Japanese Industrial Production for Sept.; expectations -1.4% vs. prior -1.4% (relevance: medium)