Pound down vs. euro despite lack of data

The pound lost ground to the single currency yesterday for the second consecutive day, losing a further 0.23 cents in value.

• Trading remained in a tight range throughout the day as the pound gradually lost some value.
  
• There was a lack of first tier economic data released in both the UK and the eurozone yesterday – however the International Monetary Fund did warn the UK government that they need to bring in clear policies to control the public finances.
  
• The FTSE 100 continued its recent upwards curve finishing the day 0.35% higher. The blue chip index is now up 5.7% on the week and is set for its best weekly performance in 4 months.
  
• Global equity markets have enjoyed a good week following US corporate earnings being released – JP Morgan was the latest heavyweight to release better-than-expected earnings in the second quarter.
  
• There is little data out of the UK today, whilst trade balance figures are released in the eurozone today.

Sterling gains vs. US Dollar after bank's results

Sterling experienced choppy trading against the US dollar yesterday, but finished little changed to close the day at $1.6438.

• The pound lost a little ground to the US dollar early yesterday morning, but made sharp gains later on as very strong results from JPMorgan reinforced previous earnings figures from Goldman Sachs and boosted hopes for a US recovery.
  
• The corporate earnings figures from JPMorgan undermined demand for safe haven currencies such as the US dollar, allowing the pound to stage a rally.
  
• However, sterling lost much of its gains yesterday evening, after the Philadelphia Fed Survey revealed a drop in the US manufacturing sector.
  
• The pound has continued to fall broadly this morning, as recent optimism gives way to worries about the corporate earnings figures from Citigroup and Bank of America, both due later today.

Euro gains vs. USD after JPMorgan results

The euro strengthened against the US dollar yesterday by 0.39 cents (0.28%) to close the day at $1.4146.

• The single currency strengthened against the greenback yesterday as global equity markets continued their recent rally, boosting risk appetite. The Dow eventually finished the day up 95.61.
  
• Surprisingly positive results from investment banking giant JPMorgan Chase was the primary driver behind these gains, following stellar quarterly profits announced by Intel and Goldman Sachs earlier this week. JPMorgan Chase unveiled bumper revenues of $27.7 billion in the three months to the end of June, with earnings rising $2.7 billion in the quarter.
  
• In addition, better-than-expected US unemployment claims data, which came in ahead of forecast at 522k this month, further boosted the single currency.
  
• However, US TIC Long-Term Purchases data released mid-afternoon capped the euro’s gains in late trading as investors worried the global economic recovery may still be some way off. This month’s reading of -$19.8 billion was well below the £16.7 billion forecast by analysts.
  
• There are no major announcements due in the eurozone today, whilst in the US Building Permits and Housing Starts data is out at 13.30 BST.

Pound down as risk appetite improves

The pound lost around half a cent to the Australian dollar yesterday to finish the day at 2.0384.

• The pound lost ground to the Australian dollar yesterday morning, as higher yielding currencies such as the aussie got a boost from strong corporate earnings figures from JPMorgan.
  
• The Australian dollar continued to post gains against sterling yesterday evening, as Wall Street closed 1.11% up following the investment banking giant’s results.
  
• However, the Australian dollar lost ground overnight when data revealed a record fall in Australian export prices for the second quarter. The 20.6% slump raised concerns that trade could be a bigger problem for the economy than expected.
  
• Bomb blasts which ripped through two hotels in Jakarta overnight, killing at least 9 people and injuring 42, also undermined the Australian dollar, as the news prompted some investors to pare riskier trades.
  
• Markets now await corporate earnings figures from Citigroup and Bank of America, both due later today.

Sterling up after Fitch NZ downgrade

The pound rose against the kiwi dollar yesterday after a ratings agency raised concern over New Zealand’s finances.

• Ratings agency Fitch downgraded its outlook for New Zealand from stable to negative yesterday, reducing investor appetite for the kiwi dollar. Its fall came despite the agency reaffirming the country’s AA+ sovereign credit rating.
  
• Strong equity market performance also buoyed investor appetite for the pound, with the FTSE 100 eventually finishing the day up 15.38.
  
• So far today, the kiwi has strengthened against sterling despite news of two explosions in Jakarta overnight generally reducing risk appetite in the market.

Sterling down vs. euro after jobless data

The pound eased back against the single currency yesterday, losing 0.35 cents despite improved risk appetite in markets.

• It was confirmed yesterday morning that Britain’s unemployment rate has surged to a 12 year high. The UK jobless rate now stands at 7.6%, with it expected to peak next year around the three million mark.
  
• Official data out of the eurozone revealed that inflation during June was negative for the first time since the single currency was introduced in 1999 – analysts are not expecting the 16-country bloc to remain in deflationary territory for very long however.
  
• The FTSE 100 enjoyed another good day with the blue chip share index rising by 2.6% to close at its highest close in four weeks. Equity markets around the world were boosted by strong US corporate earnings data, with the Fed also stating that the economy will grow between 2.1% and 3.3% in 2010.
  
• Sterling is again sluggish in early trading this morning with little economic data out of the UK or the eurozone today. Investors will keep a keen eye on US corporate earnings and the direction of equity markets for the time being.

Sterling up as risk appetite improves

Sterling recovered ground against the US dollar yesterday, rising by more than a cent to finish the day at $1.6422.

• The pound made sharp gains in the early morning yesterday, after a poll suggested China is on track to achieve its 8% growth target this year, while Asia's worst hit economies of Singapore and Taiwan will see a sharp turnaround next year as the entire Asian continent rebounds.
  
• The optimism this poll triggered led to decreased demand for the safe-haven of the dollar.
  
• Sterling did pare some of its gains against the dollar later yesterday morning, however, after British employment figures revealed a larger-than-expected rise in UK unemployment.
  
• British unemployment hit its highest rate since January 1997 in the three months to May, the figures showed.
  
• However, the pound recovered its losses in the afternoon after very strong corporate earnings figures from Intel and Goldman Sachs boosted investor confidence and triggered a sell-off in the greenback.
  
• The pound has begun losing some ground to the US dollar this morning, after news that CIT, a mid-sized US bank, may soon file for bankruptcy.

Euro strengthens after stellar quarterly results

The euro strengthened by 1.42 cents (1.02%) against the US dollar yesterday to close the day at $1.4107.

• Stellar quarterly results from investment bank Goldman Sachs and Intel, the chipmaker, buoyed risk appetite in the market yesterday as “haven” demand for the greenback subsided.
  
• This news also spurred global equity markets, with the Dow Jones eventually finishing the day up over 3% yesterday.
  
• Elsewhere, news that China’s foreign exchange reserves, the world’s largest, had grown by a record $178.3 billion to $2,130 billion in the second quarter also undermined the dollar.
  
• Finally, the announcement that US core CPI had risen to 0.2% in July, as expected, from 0.1% last month also aided the single currency’s gains yesterday as the prospect of deflation now looks increasingly unlikely.
  
• There are no major announcements due in the eurozone today, whilst in the US TIC Long-Term Purchases data is out at 14.00 BST.

Aussie up after risk appetite improves

Sterling weakened against the Australian dollar yesterday, losing over a cent to finish the day at 2.0441.

• The Australian dollar made some gains in the early morning yesterday, after a Reuters poll suggested China is on track to achieve its 8% growth target this year, and the entire Asian continent will rebound next year.
  
• China is Australia’s biggest trading partner, although a diplomatic row has cast a shadow over trade ties recently.
  
• The Australian dollar extended its gains against sterling yesterday afternoon, as very strong corporate earnings figures from Intel and Goldman Sachs boosted demand for riskier assets.
  
• However, the Australian dollar lost some of its gains overnight, after news that CIT, a mid-sized US bank, may soon file for bankruptcy, undermined demand for riskier assets.

Kiwi up over 2 cents vs. sterling

The pound lost more than 2 cents to the New Zealand dollar yesterday to finish the day at 2.5315.

• The New Zealand dollar made strong gains against the pound yesterday morning, as sterling was undermined by data showing UK unemployment hit its highest level since January 1997, raising doubts about the possibility of a recovery in the British economy.
  
• The New Zealand dollar extended its gains against sterling yesterday afternoon, as very strong corporate earnings figures from Intel and Goldman Sachs boosted demand for riskier assets such as the kiwi.
  
• However, the pound recovered all its losses overnight, as the kiwi came under broad selling pressure after ratings agency Fitch revised its outlook on New Zealand’s AA-plus credit rating to negative.

Sterling bounces back despite inflation figure

Sterling bounced back against the single currency yesterday after better-than-expected economic data and rising equity markets boosted the pound.

• Sterling initially benefited with better-than-expected housing and retail sales figures being released early on Tuesday morning.
  
• Inflation figures were released in the UK that were as expected – the consumer price index fell below the Bank of England’s target of 2% for the first time since September 2007, whilst the retail price index stands at -1.6%
  
• With the inflation figures coming in as expected, it seems that the Bank of England has room to keep interest rates on hold at 0.5% and possibly extend its quantitative easing programme further as deflation seems the most imminent threat, and they will worry about inflation in the future.
  
• Bank of England policymaker-desgnate Adam Posen said he expected the UK currency to trade higher against the euro in the medium term.
  
• Within Germany, ZEW released their economic sentiment survey that revealed a decline in economic expectations within Europe’s largest economy. The indicator dropped to 39.5 points, whilst analysts were expecting it to rise to 48.0 points.
  
• The pound was further boosted with the equity markets doing well – the FTSE 100 rose 0.9%, with miners, banks and oil groups doing particularly well. The banking sector was buoyed by Goldman Sachs stellar second-quarter results.
  
• Within the UK this morning, investors will take note from unemployment data being released, whilst within the eurozone, the consumer price index is released.

Pound after Goldman Sach's results

The pound strengthened by 0.51% against the dollar yesterday to finish the day at $1.6307.

• The pound continued to strengthen against the dollar yesterday following the release of Goldman Sachs’ second-quarter earnings. They reported a profit of $3.44bn ($4.93 per share), much more than the forecast of $3.42 per share. Such positive results have resulted in renewed optimism in the financial sector thus increasing investors’ demand for riskier currencies.
  
• JP Morgan Chase will be announcing their earnings tomorrow whilst Citigroup and Bank of America will follow on Friday.
  
• Consumer price inflation data was announced in the UK yesterday which showed that inflation has fallen below the Bank of England’s 2% target rate. This is the first time this has occurred since September 2007 which indicates that the BOE’s measures of combating the recession such as cutting interest rates and implementing quantitative easing has had an effect on prices, however it is likely that rates will remain at 0.5% well into 2010. Analysts are also speculating that quantitative easing will be extended in the future.
  
• House price data was also released by the Department for Communities and Local Government in the UK yesterday showing a smaller fall in May in comparison to the previous month thus also suggesting positive signs that the economy is beginning its recovery.
  
• In the U.S., the FOMC minutes will be a focal point for today, which will be scrutinised for insights on the Fed's decision not to increase its quantitative easing measures at the June 23/24 policy meeting. It is likely that the minutes will show the Fed decided to remain steady in order to improve the current economical situation and also in order to detract from concerns over deflation. Such statements are likely to increase risk appetite further.
  
• In the UK, jobless claims data and unemployment rate will be released today. In the US, MBA Mortgage Applications, Consumer Price Index and Industrial Production will also be announced this afternoon.

German ZEW survey hits single currency

The euro weakened by 0.01 cents (0.07%) against the US dollar yesterday to close the day at $1.3965.

• A worse-than-expected German ZEW Economic Sentiment survey figure released early yesterday weakened the single currency initially. This month’s reading of 39.5 was well down on the 42.7 registered in June, as well as analyst forecasts of 48.0.
  
• However, the euro’s falls were capped by some positive data out of the US mid-afternoon, prompting an increase in investor appetite for riskier currencies. This month’s US PPI figure and Retail Sales data were both well ahead of analyst predictions.
  
• Finally, much stronger-than-forecast results released by Goldman Sachs, who reported a 65% rise in second-quarter profits to £2.1 billion, also buoyed investor risk appetite as they speculated the worse of the recession could now be over.
  
• There are no important announcements out in the eurozone today, whilst in the US Core CPI data is out at 13.30 BST and FOMC Meeting Minutes are due at 19.00 BST.

Aussie heads higher after positive US data

The pound lost further ground against the Australian dollar yesterday as better-than-expected retail sales data out of the US prompted demand for the higher-yielding Aussie.

• Equity markets is Asia extended their recent rally in early trading yesterday, boosting demand for the Australian dollar. Mining continued their recent upwards trend – good news for commodity-rich Australia.
  
• Better-than-expected retail sales data out of the US also boosted risk appetite in markets. The Aussie continues to enjoy a significant yield advantage over the pound with the Reserve Bank of Australia’s benchmark interest rate standing at 2.5%.
  
• Unemployment figures are released in the UK today, whilst nothing major is due for release in Australia. Expect trading to take direction off equity markets and broader market movements.

Kiwi up as risk appetite improves

The pound weakened against the New Zealand dollar yesterday as general risk appetite improved.

• The New Zealand dollar strengthened overnight due to an increase in risk appetite. Goldman Sachs announced much better-than-expected second-quarter earnings, announcing a $3.44bn profit. Additionally in the US, June retail sales and the producer price index were better than anticipated thus resulting in investors’ buying into riskier currencies as optimism grew over the state of the global economy.
  
• Goldman Sachs’ report has increased confidence in the markets however investors are remaining cautious ahead of earnings reports from JP Morgan and Citigroup later this week.
  
• There are no announcements due out in New Zealand today, whilst in the UK there are jobless claims data due at 09.30 BST.

Sterling finishes slightly down against single currency

Sterling touched a 5-week low against the single currency in early trading yesterday before recovering late in the day to finish just a quarter of a cent down.

• The pound came under selling pressure in early trading as equity markets in Europe opened lower than Friday.
  
• Investors were initially concerned about the economic prospects facing the global economy at present, however these concerns soon abated as risk appetite returned to markets.
  
• The FTSE 100 ended the day 1.8% higher, boosted in particular by stronger mining and energy stocks.
  
• In early trading today the FTSE 100 is marginally up, boosted by economic news released overnight. The Royal Institute of Chartered Surveyors released better-than-expected news about the housing market, their reading the best since September 2007.
  
• The British Retail Consortium has also revealed much better-than-expected retail sales figures, boosted by the hot weather in June.
  
• Investors will take note of inflation figures released in the UK this morning and the ZEW economic sentiment survey out in Germany.

Sterling strengthens after equities rally

Sterling strengthened against the dollar yesterday by 0.15 cents (0.09%) finishing the day at $1.6225.

• Sterling weakened further against the dollar in early trading yesterday, following the news that Lloyds Plc is likely to announce further losses in its first half earnings report. The news was reported by the Sunday Times from an unknown source and could be as much as £13 billion.
  
• However losses were limited as stock markets rallied, in particular in the US following comments made by analyst Meredith Whitney who stated that investors should buy shares in Goldman Sachs and that banks are likely to improve their earnings by 15%.
  
• Jobless claims data due in the UK tomorrow will be of particular importance as it is expected to show an increase in claims in June from the May forecast. This may have an adverse effect on sterling.
  
• There are several significant announcements due in the UK today, including Consumer Price Index and Retail Price Index at 09.30 BST. If the results are weaker than expected then that may result in the Bank of England extending their quantitative easing plan and possibly further weakening the pound. In the US, Producer Price Index and Retail Sales data will be of most significance, when they are released at 13.30 BST.

Euro strengthens after risk appetite returns

The euro strengthened against the US dollar by 0.41 cents (0.29%) yesterday to close the day at $1.3975.

• Initially, the single currency headed lower yesterday as stuttering equity markets continued to hamper risk appetite in the market. However, they later picked up, spurring the euro’s gains yesterday afternoon.
  
• In addition, news that the Japanese government had upgraded its economic outlook for the third consecutive month provided additional momentum to “riskier” currencies as investors looked beyond the perceived safety of the greenback.
  
• Finally, the news that the US Federal Budget Balance was ahead of forecast at -$94.3 billion also spurred movement away from the dollar yesterday evening. The reading was a significant improvement on June’s reading of -$189.7 billion, as well as slightly above analyst predictions of -$95 billion this month.
  
• There are major announcements due in both the eurozone and US today. In the former, German ZEW Economic Sentiment data is out at 10.00 BST, whilst in the latter, Retail Sales and PPI is due at 13.30 BST.

Aussie heads higher against GBP

The pound weakened against the Australian dollar yesterday, losing a cent to finish the day at 2.0714.

• The Australian dollar recovered some ground yesterday as a rise in US stocks gave the riskier currency a boost.
  
• However, trading was choppy yesterday as sentiment remains fragile at the moment, with markets speculating that recent optimism was overdone.
  
• The aussie gained further ground against the pound overnight, as the Australian currency was supported by stronger business data.
  
• The National Australia Bank Business Conditions report climbed by 12 index points to -2, taking it back to the level before the collapse of Lehman Brothers in September last year.

Kiwi strengthens after markets rally

Sterling weakened against the New Zealand dollar yesterday, losing almost 2 cents to finish the day at 2.5653.

• The pound made small gains against the New Zealand dollar early yesterday, but fell sharply in the afternoon as Wall Street staged a morning rally amid hopes that US corporate earnings may not be as weak as expected.
  
• The rise in US equities increased demand for riskier currencies, offering the New Zealand dollar some support.
  
• However, the kiwi has weakened a little this morning as investors brace for earnings reports from the US, including an important one from Goldman Sachs.

Sterling slightly down on Friday after rough week

Sterling weakened by 0.17 cents (0.15%) against the euro on Friday to close the day at 1.1631.

• The UK trade deficit narrowed to a three-year low in May with a goods deficit of £6.3bn which will provide some underlying support for sterling, although the impact was limited.
  
• As expected, the Bank of England left interest rates on hold at 0.50% following the latest MPC policy meeting. The central bank also announced that their quantitative easing programme would remain at £125bn, contrary to some speculation that the amount of bond buying would be increased and this provided an immediate boost to sterling last week.
  
• The bank announced that there would be a review at the August meeting when the latest inflation report will be available. There will continue to be some expectation the bank will increase the bond buying next month and this will tend to prevent any substantial improvement in sentiment.
  
• The ECB stated last month commercial banks in the 16-nation euro region may lose a further $283 billion by the end of next year as the financial crisis forces them to write off bad loans.
  
• It is anticipated that European Central Bank President Jean-Claude Trichet will today state that interest rates will not be cut at the ECB’s next meeting.
  
• The ECB said in its monthly report last week that interest rates are “appropriate” and the eurozone’s economy will gradually get out of the recession in 2010. The region’s interest rate remained unchanged at 1% on July 2 in order to improve economic growth in the eurozone.

Pound dragged down by falling equities

The pound weakened against the US dollar on Friday, losing more than a cent as falling equities made investors more risk-averse.

• The pound made strong gains against the US dollar on Thursday after the Bank of England shocked markets by announcing it would leave its quantitative easing programme at £125bn.
  
• But the pound began falling against the dollar on Friday, as the greenback gained support from falling equity markets and worries about upcoming US corporate earnings figures.
  
• British shares hit a 10-week low on Friday, undermined by falling oil prices and a downbeat earnings outlook from US oil company Chevron Corp.
  
• The pound has continued falling broadly this morning, losing another 1½ cents to the US dollar as the British currency comes under broad selling pressure amid struggling equities and growing risk aversion.

Euro weakens vs. US dollar as risk appetite wanes

The euro weakened by 0.84 cents (0.60%) against the US dollar on Friday to finish the day at $1.3934.

• In trading on Friday, the euro weakened against the dollar following the onset of the US corporate earnings season. This contributed to a growing sense of unease about the global economic recovery, reducing appetite for riskier currencies like the euro.
  
• Further falls in equity markets, commodities and emerging market currencies also weighed on the single currency, as did cautious comments on the global outlook from the IMF and G8 meeting in Italy.
  
• However, the euro’s falls were stemmed to some extent as investors took heart from Wednesday’s German industrial output figures released earlier in the week. They suggested the eurozone may hold up better than many had feared.
  
• In addition, monthly French industrial production also came in stronger-than-forecast on Friday, registering at 2.6% from -1.5% last month and ahead of analyst forecasts of -0.1%.
  
• There are no major announcements due in the eurozone today, whilst in the US the Federal Budget Balance is due at 14.00 BST.

Sterling finishes the week down vs. aussie

Last week ended with sterling losing 45 cents against the Australian dollar, as traders booked profits ahead of the weekend.

• Nevertheless, last week was very good for the pound as it gained nearly four cents against the Australian dollar as the recent cooling in commodity prices took its toll on the Aussie.
  
• Friday proved to be quiet for GBP/AUD trading as investors were wary of taking on too much risk – the pound was not helped as the FTSE 100 had a sluggish day.
  
• In early trading today, the pound is under broad selling pressure as equity markets remain under pressure. This week could prove to be volatile as key economic data is released out of America.

Sterling finishes down against kiwi

Sterling came under selling pressure against the New Zealand dollar on Friday, losing over a cent in value during trading.

• Last week still proved to be positive for the pound as it gained 2.56 cents against the kiwi, as the commodity based New Zealand currency came under increased selling pressure.
  
• In early trading today the pound is trading in a narrow range against the kiwi as equity markets in Asia struggled overnight. Retail sales data was also released in New Zealand late last night, coming in ahead of consensus.
  
• Economic data is light on the ground within the UK today, so expect trading to take its lead from equity market movements.

Pound hits one month low against the euro

Sterling hit a one month low against the single currency yesterday, finishing the day 0.55 cents lower – the third consecutive day of losses for the pound.

• Sterling was on the back foot early in London trading following manufacturing output falling by 0.5% in May – analysts were suggesting that the sector would actually grow by 0.2% during the month.
  
• The National Institute of Economic and Social Research also stated that GDP during the second quarter has contracted by 0.4%, dashing hopes that the UK may have escaped the recession.
  
• Yesterday’s gains for the single currency were extended after figures showed German factory orders unexpectedly jumped to 4.4 percent, contrasting sharply with the weak UK data.
  
• The weak economic data emanating from the UK has raised the prospect that the Bank of England will expand its quantitative easing programme at its latest policy meeting tomorrow. Interest rates are expected to stay on hold at 0.5%.
  
• Halifax release their house price survey today within the UK, whilst the EU release their revised first quarter GDP figures. Germany will reveal their industrial production figures later in the morning giving an insight into how the sector is faring at present.

Pound loses further ground to the US dollar

The pound lost further ground to the US dollar yesterday, falling by 0.91% to close the day at 1.6137.

• Concerns over the health of the British economy were fanned yesterday after the announcement of worse than expected industrial production data saw risk aversion spread and the pound heavily sold. Manufacturing output fell by 0.5% in May and the wider measure of Industrial Production contracted 0.6%, which surprised investors who were expecting both measures to grow by 0.2%.
  
• This news damaged hopes that the UK economy would bounce back in the second quarter after contracting at the fastest rate for 50 years in the first 3 months of this year. Indeed, the National Institute of Economic and Social Research announced that the UK economy shrank by 0.4% in the second quarter and admitted that they no longer believe that the recession reached bottom in March.
  
• The pound has continued to slide in this morning’s trading ahead of tomorrow’s Bank of England interest rate policy meeting, where many investors now believe that the BoE will expand their quantitative easing programme in a bid to encourage economic growth.
  
• In today’s trading Halifax House Price data is announced in the UK this morning, whilst in the US MBA mortgage applications, EIA crude oil stocks change and consumer credit figures are announced.

Euro weakens against US dollar on growing risk aversion

The euro weakened against the dollar by 0.60 cents yesterday, finishing the day at $1.3923.

• The euro was briefly boosted yesterday after data showed that German factory orders recorded their largest jump in two years . Orders rose 4.4 per cent in May, much better than the 0.5 per cent increase forecast.
  
• However, worries over the deepening recession resulted in risk aversion and prompted investors to buy into the safe-haven dollar, undermining demand for the euro and allow the dollar to finish up on the day.
  
• The euro weakened further against the dollar overnight as investors continue to fret that optimism about a global economic recovery has been overdone.
  
• Investors are awaiting comments on the dollar's role as the world's reserve currency before a three-day meeting of leaders of the Group of Eight industrial nations and leading developing nations in Italy that starts later on Wednesday.
  GDP figures are due to be released in the eurozone this morning as well as industrial production in Germany. In the US, MBA Mortgage Applications and EIA Crude Oil Stocks change will be announced this afternoon.

Pound trades mixed against New Zealand dollar

The pound lost ground to the New Zealand dollar yesterday morning, before recovering all its loses in the afternoon to close 0.33% up on the day at 2.5656.

• Sterling fell against most currencies, including the kiwi dollar, yesterday morning after weak British industrial production data fanned further doubts about a quick recovery for the UK economy.
  
• The figures showed British manufacturing output fell by 0.5 percent in May and industrial production shrank by 0.6 percent, against forecasts for a 0.2 percent rise in both measures.
  
• Sterling dipped to a 1-week low against the New Zealand dollar following the release, but recovered all its losses in the afternoon as investors began to shy away from higher yielding currencies.
  
• The pound held its gains overnight, as a gloomy outlook for the world economy was backed up by dismal private-sector orders for Japanese machinery, a key leading barometer of the state of Asian demand and the region's manufacturing sector. Orders unexpectedly fell to a record low in May, undermining demand for higher yielding currencies such as the New Zealand dollar.

Sterling trades mixed against the aussie dollar

The pound fell sharply against the Australian dollar yesterday morning, hitting a 3-week low before recovering in the afternoon to finish the day up.

• Sterling fell broadly yesterday morning after weak UK industrial production data fanned further doubts that the economy is poised for a quick recovery.
  The figures showed British manufacturing output fell by 0.5 percent in May, while industrial production shrank by 0.6 percent, in contrast to forecasts for a 0.2 percent rise in both measures.
  
• The pound sank to a 3-week low against the aussie dollar following the data, but recovered ground in the afternoon as investors sold the higher yielding aussie amid growing risk aversion.
  
• Sterling finished the day marginally up against the Australian currency at 2.0449, and has held its ground overnight as signs an economic recovery in Asia was struggling to gain traction deterred investors from buying riskier currencies.

Sterling loses further ground to the euro

The pound lost a further 0.32 cents against the single currency yesterday as European equity markets remained sluggish.

• Economic announcements were light on the ground in the UK, however traders remained concerned over hopes of an economic recovery as they continued to sell off the pound.
  
• The FTSE 100 had a tough day as it slipped below the 4,200 mark as oil, mining, and the banking sectors all came under selling pressure.
  News out of the eurozone was little better, as the Sentix Investor Confidence survey was released much worse than anticipated.
  
• In early trading today, the pound is continuing to trade within yesterday’s ranges as investors remain cautious.
  
• The market will take note from industrial and manufacturing production surveys released in the UK this morning, whilst within Germany, factory orders data is released.

Sterling hits 1-month low against the US dollar

The pound fell against the US dollar yesterday, hitting a one month low as concerns about the UK economy and expectations that the Bank of England would increase its quantitative easing programme saw the pound heavily sold off.

• Lingering concerns about the global economy, fed by Thursday’s poor US payrolls figures, saw risk appetite suffer and caution surfaced ahead of this Thursday’s Bank of England meeting.
  
• Falling equity prices also undermined the pound’s position yesterday.
  
• Today sees a barrage of economic data released. In the UK, industrial and manufacturing production data is announced this morning and BRC Shop Price Index, Nationwide Consumer Confidence and NIESR GDP Estimate figures are released later in the day.
  
• In the US, API Crude Oil Inventories and ABC/Washington Post Consumer Confidence data will be announced this evening.

Euro makes small gains against the US dollar

The euro strengthened against the US dollar by 0.30 cents on Monday, to finish the day at $1.3981.

• Weak eurozone retail data and a grim US jobs report released last week reaffirmed fears over the recovery of the global economy, which in turn increased risk aversion as it pointed to the view that investors have been far too optimistic regarding recovery prospects.
  
• However, despite this increased risk aversion the dollar’s gains were limited yesterday due to speculation that its status as the global reserve currency may be discussed at the G8 meeting in Italy. There have been reports that China is keen to discuss a new global reserve currency, however the vice minister said in Rome on Sunday that the dollar would be the most important international reserve currency for years, according to China's official Xinhua news agency.
  
• The dollar strengthened against the euro this morning in anticipation of the Group of Eight (G-8) meeting due to take place this week. In Asia on Monday, the dollar was mixed against other major currencies as investor caution grew ahead of a summit of the Group of Eight (G-8) economic powers this week.

Sterling falls sharply against kiwi dollar

The pound fell sharply against the New Zealand dollar yesterday, losing 1.38% to finish the day at 2.5572.

• Sterling fell sharply against the kiwi dollar in the early morning yesterday, as investors continued to sell off the British currency on growing risk aversion.
  
• The pound levelled off in the afternoon, before resuming its fall overnight amid speculation that the Bank of England plans further quantitative easing.
  
• The kiwi dollar also got a boost this morning from better than expected business confidence figures for the second quarter, suggesting the economy may pull itself out of recession by the end of the year.

Pound weakens against the Australian dollar

Sterling lost further ground to the Australian dollar yesterday, falling by 0.33% to close the day at 2.0421.

• In a volatile day’s trading yesterday, the pound weakened against the Australian dollar in the morning as investors continued to sell off the British currency.
  
• However, sterling was temporarily dragged up in the afternoon following a small rally on the FTSE, although the pound’s gains were given back in the evening after London equities still finished down on the day.
  
• The pound lost further ground to the Australian dollar early this morning, after the Reserve Bank of Australia kept interest rates on hold at 3%.
  
• The pound has continued to lose ground to the Australian dollar this morning on speculation that the Bank of England plans further action to boost the economy, and as forecasts for weakening company earnings hurts stocks.

Dovish Trichet comments weaken euro

The pound strengthened by 0.54 cents (0.46%) against the euro yesterday to close the day at 1.1704.

• In a volatile day’s trading yesterday, the pound first weakened then strengthened against the euro after Bank of England policymaker Tim Besley said it was too early to judge when the central bank would need to start withdrawing the massive stimulus it has delivered to the UK economy.
  
• However, another Bank of England policymaker was more optimistic yesterday. In his testimony to the UK Treasury Committee, David Miles said the most rapid declines in output were “behind us”. In addition, a credit conditions survey released by the central bank also buoyed sterling, after it showed that British lenders expect to make credit more readily available to households and businesses over the coming quarter.
  
• However, a PMI survey showing a modest deepening in the contraction of the UK’s construction industry capped sterling’s gains in late trading, after the index fell to 44.5 in June.
  
• The major announcement yesterday, however, was the European Central Bank’s interest rate decision, where they decided to keep rates on hold at 1.00%. ECB President Jean-Claude Trichet’s forecast that eurozone activity would likely remain weak for the rest of this year, stabilise in 2010 and grow thereafter weakened the single currency, as investors were hoping for a recovery sooner.
  
• In trading so far today, sterling has continued its rise against the single currency as investors continue to digest yesterday’s announcements.
  
• There are no major announcements due in the eurozone today, whilst in the UK Services PMI data is out at 13.30 BST.

Sterling weakens on poor US non-farms

Sterling weakened by 0.86 cents (0.52%) against the US dollar yesterday, finishing the day at $1.6392.

• In early trading yesterday, sterling weakened against the dollar as traders were unwilling to take on large positions ahead of important US jobless data out at lunchtime. When the announcement came, sterling plummeted after it showed a larger-than-expected drop in US non-farm payrolls in June.
  
• The pound was already in negative territory before the data, however, following cautionary comments from Bank of England policymaker Tim Besley and worse-than-expected UK construction PMI figures. Besley said it was too early to say when the central bank would be able to withdraw the massive stimulus it has supplied to the British economy, whilst the latest construction data showed a further deepening in the contraction of the sector.
  
• Weak London equities and a fall in oil prices also hurt the UK currency yesterday. The FTSE 100 eventually finished the day down 106.44 (2.45%).
  
• In trading so far today, the pound has recovered some of yesterday’s losses despite a warning from the WHO that swine flu is now ‘unstoppable’.
  
• There are no major announcements due in the US today, whilst in the UK Services PMI data is out at 13.30 BST.

Euro weakens after poor US jobs data

The euro weakened against the US dollar by 1.39 cents (0.98%) yesterday to finish the day at $1.4001.

• In trading yesterday, the euro weakened against the dollar after surprisingly poor US jobs data and dovish comments by the ECB President knocked risk appetite in the market.
  
• US non-farm payrolls dropped by a larger-than-expected amount last month, raising investor concern about the pace of the economic recovery. Elsewhere, cautionary comments from the ECB President Jean-Claude Trichet, who said growth in the eurozone would not return until late 2010, weighed on the single currency. The central bank also decided to leave their interest rates on hold at 1.00%.
  
• The single currency’s falls were further exacerbated yesterday after ratings agency Moody’s downgraded Ireland’s credit rating from AAA to AA1. They also gave the country a “negative” outlook.
  
• In trading so far today, the euro has gained ground against the greenback as investors continued to pick over yesterday’s announcements.
  
• There are no major announcements due in the US or eurozone today.

Pound strengthens on trade balance figs

The pound gained substantial ground against the Australian dollar yesterday, before giving back some of its gains overnight.

• Following the release of worse-than-expected Australian trade balance figures, the pound made strong gains against the aussie yesterday, rising by almost 3 cents and investors sold the Australian currency.
  
• However, the Australian dollar began recovering some of this lost ground overnight, as robust domestic data helped offset the Trade Balance figures.
  
• Private sector data overnight showed Australian vehicle sales surged to their third highest ever in June, while services sector activity boasted the first expansion in 15 months.
  
• These figures emphasised Australia's economic and financial health relative to other countries.

Kiwi falls dramatically on weak equities

The New Zealand dollar came under selling pressure yesterday, losing over 3 cents to the pound.

• Investors sold the kiwi dollar yesterday as weaker equity markets encouraged them to shun riskier currencies.
  
• Demand for the New Zealand dollar was also undermined as investors lowered their expectations of a possible rate hike later in the year.

Pound dips on Tuesday's GDP downgrade

The pound weakened by 0.79 cents (0.67%) against the euro yesterday to close the day at 1.1650.

• In early trading yesterday the pound weakened against the euro, as the previous day’s unexpectedly sharp downward revision in British first-quarter GDP continued to weigh on sterling.
  
• In addition, data out in the eurozone, which showed a slowing in the deterioration in the region’s manufacturing sector for the fourth straight month, also helped the euro’s cause mid-morning.
  
• Sterling fell despite better-than-expected manufacturing PMI figures and a strong performance from London equities, which started the new quarter on the front foot. The FTSE 100 eventually finished the day up 91.50 (2.15%).
  
• In trading so far today, the pound has continued its slide against the single currency as investors await the European Central Bank’s latest interest rate decision at 12.45 BST today. There are no major announcements due in the UK.

Pound up as FTSE gains over 2%

The pound strengthened by 0.17 cents (0.10%) against the US dollar yesterday, finishing the day at $1.6478.

• In early trading yesterday, sterling strengthened against the greenback after better-than-expected UK manufacturing PMI data buoyed demand for the UK currency. The index rose to 47.0 in June from 45.4 in May, the highest it has been since May 2008.
  
• Strong gains on London equity markets also helped the pound’s cause as they started the third quarter positively. The FTSE 100 eventually finished up 91.50 (2.15%).
  
• However, the news that US private employers cut 473k jobs in June capped demand for the riskier pound early yesterday afternoon. The figure was more than expected but less than the 485k jobs lost in May. US pending home sales data also came in worse-than-forecast, but American manufacturing PMI figures were ahead of predictions at 44.8. These also had an effect on the pound’s performance in late trading.
  
• In trading so far today, the pound has weakened against the greenback as traders eye important US Non-Farms data at 13.30 BST. There are no major announcements due in the UK today.

Euro up despite US job figures

The euro strengthened by 1.09 cents (0.78%) against the US dollar yesterday to finish the day at $1.4140.

• In early trading yesterday, the euro strengthened against the dollar as better-than-expected manufacturing data released in the eurozone indicated the 16-nation bloc will contract much less in the second quarter even if growth remains a long way off.
  
• Buoyant European equity markets also helped extend the euro’s gains as risk appetite improved, however the single currency’s progress was checked in the early afternoon following the release of surprisingly poor US employment figures. US private employers cut 473k jobs last month, more than forecast but less than the 485k jobs lost in May.
  
• Worse-than-expected US pending home sales data, released mid-afternoon, also capped the euro’s gains to some extent, after they came in at 0.1% this month, well below the 0.7% analysts had been expecting.
  
• However, US manufacturing PMI figures were ahead of forecast at 44.8, stemming the single currency’s dip to some degree.
  
• In trading so far today, the euro has pared some of yesterday’s gains as investors await important announcements out today. I n the eurozone, the European Central Bank’s latest interest rate decision is due at 12.45 BST, whilst in the US important Non-Farms employment data is out at 13.30 BST.

Aussie pars gains after weak trade balance figs

Sterling weakened slightly against the Australian dollar yesterday, but recovering overnight after worse-than-expected Australian Trade Balance figures were released.

• The aussie dollar was firm against the pound yesterday ahead of the Trade Balance figures, as investors only anticipated a small deficit.
  
• However, when the figures were released overnight they undermined demand for the Australian dollar, as the figures revealed a trade deficit 4 times larger than had been expected.
  
• Investors will now turn their attention to important US employment figures to determine risk appetite in the market.

Kiwi falls after dairy price slide

Sterling strengthened against the kiwi dollar yesterday, after better-than-expected UK manufacturing data and a strong performance on London equity markets.

• Stronger-than-forecast UK manufacturing PMI data buoyed demand for the UK currency mid-morning yesterday. The index rose to 47.0 in June, the highest it has been since May 2008.
  
• The downward pressure on the kiwi was also increased after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, reported whole-milk powder prices had slid to a five-year low.
  
• Finally, strong London equities drove sterling’s gains yesterday, with the FTSE 100 eventually finishing up 91.50 (2.15%).

Sterling down after weak GDP and current account figures

Sterling weakened by 0.32 cents (0.27%) against the euro yesterday to close the day at 1.1729.

• In early trading yesterday sterling strengthened against the single currency, after Britain’s third-largest mortgage broker, Nationwide, reported a rise in house prices in June, the third rise in four months. Some traders took this as a sign that the ailing UK property market may be finally bottoming out.
  
• However, much worse-than-expected revised first-quarter UK GDP figures sent the pound into negative territory mid-morning. The data showed the UK’s economy contracted by 2.4% in the first three months of 2009, the largest decline in 50 years and a marked drop on the -1.9% originally published.
  
• The news that Lloyds Banking Group was to cut 2,100 jobs over the next three years also shook investor confidence in the market, as did a worse-than-expected UK current account figure released mid-morning, which registered at -£8.5 billion this month, well below analyst forecasts of -£6.5 billion.
  
• In trading so far today, the pound has resumed its slide against the single currency as investors continue to digest yesterday’s surprisingly weak GDP figure.
  
• There are no major announcements due in the eurozone today, whilst in the UK Manufacturing PMI data is due at 09.30 BST.

Sterling weakens over a cent vs. USD

Sterling weakened by 1.06 cents (0.64%) against the US dollar yesterday, finishing the day at $1.6461.

• In early trading yesterday sterling hit an eight-month high against the dollar, after better-than-expected data released by Nationwide buoyed investor hope that the ailing UK housing market may soon recover. Confounding predictions of a fall, the building society reported a 0.9% rise in house prices this month, taking the annual rate of house price decline to 9.3%.
  
• However, a scaling down of the UK’s revised first-quarter GDP figure from an initial reading of -1.9% to -2.4% prompted traders to dump the pound mid-morning, as some of the recent optimism surrounding the UK’s recovery cooled.
  
• Sterling’s falls were further extended yesterday afternoon following surprisingly weak US consumer confidence index data. It revealed a fall in June to 49.3 from a downwardly revised 54.8 in May, prompting investors to sell the higher-yielding pound to reduce risk.
  
• In trading so far today, the pound has continued its slide against the greenback as investors brace themselves for some important announcements today.
  
• In the UK, Manufacturing PMI data is due at 09.30 BST, whilst in the US ADP Non-Farm Employment Change figures are out at 13.15 BST, followed by ISM Manufacturing PMI and Pending Home Sales at 15.00 BST.

Euro falls as risk appetite wanes

The euro fell by 0.5 cents (0.36%) against the US dollar yesterday to finish the day at $1.4031.

• In early trading yesterday the single currency first strengthened then weakened against the dollar, after data released in the eurozone knocked early risk appetite in the market.
  
• Figures showed loans to eurozone businesses and households slowed to 3.7% in May from a year ago, well below forecasts of 4.6% and the previous month’s reading of 4.9%. This underscored the urgent need for the European Central Bank’s 442 billion euro liquidity injection, announced last week, to take effect soon.
  
• Poor US consumer confidence index data released mid-afternoon also hit risk appetite in the market, showing a drop in June to 49.3 from a downwardly revised 54.8 in May. This prompted investors to buy back into the perceived safety of the greenback.
  
• In trading so far today the single currency has risen slightly against the greenback, as traders continue to pick over yesterday’s economic releases.
  
• There are no major announcements due in the eurozone today, whilst in the US ADP Non-Farm Employment Change figures are out at 13.15 BST, followed by ISM Manufacturing PMI and Pending Home Sales at 15.00 BST.

Pound falls sharply vs. aussie after GDP data

The pound fell sharply against the Australian dollar yesterday after the release of worse-than-expected revised GDP figures from the UK.

• The pound began weakening prior to the release of the GDP data, as falling equities dragged sterling lower.
  
• Sterling’s losses were exacerbated by the GDP figures, which revealed that Britain's economy contracted more sharply than previously estimated in the first quarter, with gross domestic product showing a quarterly decline of 2.4% compared with the previous estimate of a 1.9% decline.
  
• Sterling continued to lose ground against the Australian dollar overnight, after the aussie got a boost from the release of Australian retail sales figures, which rose for the third consecutive month in May.

Sterling rises against kiwi after RBNZ's plans

Sterling experienced choppy trading against the New Zealand dollar yesterday.

• The pound rose against the kiwi dollar in the early morning, after the Reserve Bank of New Zealand announced details of new liquidity requirements for domestic banks, which may increase the cost of lending by 10 to 20 basis points.
  
• However, sterling began to weaken before the release of revised British GDP figures, and continued to fall after the figures revealed that the British economy contracted more sharply than previously estimated, with GDP showing a quarterly decline of 2.4% compared with the previous estimate of a 1.9% decline.