The USD/CAD dropped on Monday as traders bought the Canadian Dollar in anticipation of a possible rate hike by the Bank of Canada before the end of the year. Citing two reports, the Sales Growth Index and a consumer price report, traders are looking for inflation to increase, thereby increasing the odds of a rate hike by December. The latest Sales Growth Index rose while consumer prices rose 1% in May, the biggest gain since January 1991. The charts indicate that this market is still range bound, but that it is likely to feel downside pressure to1.0071 to 1.0011 over the near term. On the upside, 1.0223 looks like solid resistance.

Signs that the Australian economy may be slowing down, is putting pressure on the AUD/USD. A report showing a slowdown in construction and another showing fewer job-vacancy ads is causing traders to believe that the Reserve Bank of Australia may through raising rates the rest of the year. Although a couple of weeks ago this market was poised to breakout over .9700 on its way to par, the market has not been getting any bullish news lately. Chart watchers expect the market to pull back into a support zone at .9497 to .9457 before new buying comes in to stop the break.

Support for the NZD/USD continued to erode on Monday as rising oil prices and a falling stock market are making this pair vulnerable to the downside. Last month's comment from Reserve Bank of New Zealand Alan Bollard stating that he will "likely"cut the official rate from 8.25% is bringing new sellers into this market. Financial market traders are also indicating there is a 33 percent chance of a rate reduction this month. Another blow to the long side was a report from the New Zealand treasury indicating that the economy may have been in a recession in the first half of 2008. Heavy selling pressure may find some support at .7485, but if this support erodes, a test of the last main bottom at .7445 is likely. There is a major 50% price at .7427, which may attract some short covering, but as long as the NZD/USD continues to trade under .7664, look for lower prices over the long run.

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