Kiwi continues strong run agains the pound

The pound fell a further 0.5% against the kiwi yesterday in the wake of firmer stock markets to close at 2.3682.

• Gains made in the US stock indices were mirrored in the Nikkei 225 yesterday allowing the kiwi to continue its strong run against the pound.
  
• Demand for the New Zealand currency was further supported overnight as much improved data emerged about building approvals, which added strength to the country’s economic recovery.
  
• There was also support from the US where a better-than-forecast GDP figure improved investor sentiment about a global recovery and aided demand for higher-yield currencies.
  
• This morning however, the pound has already recovered half a cent against the kiwi as investors remain cautious over holding the currency over the weekend and decide to lock in their profits.

Aussie gains another 2 cents vs sterling

Sterling’s brief gains against the aussie on Wednesday were short-lived as it lost over two cents (1.0%) yesterday to close at 1.9384.

• Sterling suffered a substantial setback yesterday on the path to recovery following particularly weak business investment data that emerged well below its predicted level for the quarter.
  
• In addition, strong data was released in Australia in the early hours of this morning that saw a huge rise in private capital expenditure, reaffirming support for their economy recovery.
  
• The 3.3% figure was a vast improvement on the previous quarter of -7.3%, and pushed the pound down below the 1.94 level.
  
• Data from Australia has been relatively strong recently, suggesting that economy has a fair bit of momentum, and traders are now speculating that the Reserve Bank of Australia could raise interest rates as early as October.

Single currency reverses losses against greenback

The single currency was a beneficiary of heavy selling of the dollar late yesterday, gaining 0.6% to close the day at 1.4341.

• The single currency was able to reverse a 3-day downward spiral against the greenback following a couple of positive economic figures in the US.
  
• US GDP emerged as -1.0% last month, better-than-forecast, which enabled the single currency to drive higher against the greenback.
  
• Investment into riskier assets was further encouraged following data that revealed a fall in US jobless claims this week.
  
• The single currency also found support from the major US stock markets which made minor gains, reaffirming the strength of global recovery.
  
• In trading so far this morning the euro has capped its gains with the trading rate for the pair remaining around yesterday’s closing price.
  
• There are no major economic announcements out in the eurozone today, whilst in the US there is a consumer spending figure released at 13:30BST which should give a good gauge of the current economic receovery.

Pound starting to recover losses vs dollar

Following late selling yesterday evening, the pound was able to edge back up against the greenback to close the day nearly a half cent up at 1.6281.

• Sterling seemed to be firmly on track for its steepest monthly decline this year with it briefly dropping below the 1.62 mark yesterday.
  
• In the UK, both business investment and realised sales figures emerged well below their forecasts supporting the notion of a weak recovery and discouraging sterling investment.
  
• However, in the US, government data showed that the economy fell by less-than-expected in the second quarter, easing the market’s risk aversion, and enabling the pound to claw back some of the week’s substantial losses.
  
• Additionally, a poor day for the European equity markets was not mirrored on either the Dow or Nasdaq, which both achieved minor gains and supported riskier investment.
  
• Inflation figures are released in the US today at 13:30BST and are forecast to remain relatively unchanged from last month as forecasters remain wary of over-estimating the pace of recovery.

Weak economic data drove pound down yesterday

Sterling suffered again yesterday, after weak economic data threatened the stability of the UK economic recovery.

• Any gains that sterling made following the news that house prices rose for the fourth month in a row were offset by a far worse-than-expected realised sales figure, which added to the selling pressure already on the pound.
  
• The pound was further devalued as data also showed that UK business investment, seen by many as a prerequisite for recovery, fell by the most in 24 years, reinforcing the view that UK interest rates will remain low to revive the economy.
  
• Analysts immediately said that overall economic growth figures for the second quarter, due out today at 09:30BST, could be revised down, rather than up as some had been hoping.
  
• The pound was also undermined yesterday after the FSA chairman said that the UK financial sector might have become “too big for society.”
  
• However, in trading so far this morning, the pound has halted its slide against the single currency as investors consider locking in profits.

Risk caution over the kiwi, rallies sterling

The pound has finally capped its losses against the kiwi as cautious investors suspect that the risk rally may have gone too far.
• Sterling initially fell further against the kiwi yesterday evening as the investment trend continued to favour riskier assets.
• However, a weaker-than-expected New Zealand trade balance figure released late last night saw investors return to caution, which capped the kiwi’s gains.
• A fall in Chinese stocks added to selling pressure on the kiwi, with investors cautious about the pace of New Zealand’s recovery.
• The pound is currently trading 0.07% up for the day, but with CBI Realised sales data to be released at 11:00BST, a positive reading could extend these gains.
• The New Zealand monthly building consents data is released today at 23:45BST, which will give investors a good insight into the current economic health of the economy.

Pound caps losses vs aussie

Sterling finally reversed its downward slide against the Australian dollar closing marginally up at 1.9589.

• The US economy suffered a minor setback yesterday after data was released revealing worse-than-expected core durable goods orders for July, which dulled investors risk appetite and hurt the higher risk currency.
  
• Additionally, the data encouraged investors to lock in profits made in aussie-denominated assets held last week, which allowed the pound to recover some of its losses.
  
• A fall of 1.5% in the Nikkei 225 index further hindered the Australian dollar due to the commodity driven nature of the currency.
  
• This morning however, the aussie recouped its value after a surprising jump in business investment last quarter suggested the economy is growing faster than expected, underpinning hopes for a rate hike later this year.

Greenback recovers early losses as risk erodes

Early gains for the single currency, following the positive Ifo survey, were swiftly recovered by the greenback to close the day at 1.4255.

• The euro initially hit the day’s high of 1.4351 against the dollar, after the German Ifo business survey notched up its strongest monthly gain since 1996.
  
• But these gains were swiftly erased as details of a US durable goods report for July were less upbeat than expected, eroding risk appetite in the market and sending investors running to the relative safety of the US dollar.
  
• As a key measure of business demand, the weak durable goods data reminded investors that the US economy still faces huge challenges as it tries to emerge from deep recession.
  
• The single currency was also hampered by a poor day’s trading in the European equity markets which, even after a late rally, saw both the FTSE and the DAX closing over half a percent down.
  
• This currency pairing is trading at a steady level this morning, as the markets wait for crucial economic data to emerge from the US later today.

Sterling slides further vs dollar

Sterling fell by nearly two cents, or 1.2%, at its lowest point yesterday as poor economic data from the US encouraged investors to dump the pound.

• A survey of new purchase orders for durable goods in the US revealed a figure slightly down on forecasts, dulling investors’ appetite for sterling as they retreated to the safer currency.
  
• This data was immediately levelled out by a stronger-than-forecast US homes sales figure, but it had a minimal selling effect on the dollar, with the pound eventually closing the day down at 1.6233.
  
• The pound also suffered from a slowdown in the recent bullish trend of European equities, with the FTSE100 ending up 0.54% down for the day, putting selling pressure on sterling.
  
• In trading so far this morning, the pound has slowed its rate of decline following stronger-than-forecast data emerging for UK house prices.
  
• Investors will be keenly anticipating the US Prelim quarterly GDP figure announced today at 13:30BST, with forecasters still predicting an economic retraction of 1.4% despite recent upbeat sentiment about US recovery.

Sterling continues longest decline vs euro since January

Another fall for sterling yesterday puts it into its longest decline against the single currency since January.

• The euro continued to advance yesterday following a stronger-than-forecast German Ifo business morale survey, which reinforced signs that Europe’s largest economy is recovering from recession.
  
• The pound also suffered as the yield on two-year government bonds fell to a record low, making short-term British debt less attractive than its eurozone counterpart.
  
• One analyst said yesterday that with BoE so cautious about keeping rates low and the Ifo so positive, it is hard for euro/sterling not to be pushed higher.
  
• Despite the pummelling that sterling has taken this month, some market participants said that the currency may be in for a correction next month, when many traders return from holidays and more economic data reflects improvements in the UK economy.
  
• A positive CBI retail sales figure, announced today at 11:00BST, could help to slow the pound’s decline, whilst in the eurozone investors will be listening in to the preliminary CPI figures from six German states, released throughout the day.

Sterling loses 2.6% vs kiwi in a week

Sterling fell for a sixth consecutive day against the kiwi yesterday, having now lost nearly 2.6% of its value since early last week.

• The New Zealand dollar stayed strong overnight after volatile Chinese stocks moved higher.
  
• The higher-yielding and commodity-linked currencies, such as the kiwi, have gained ground with Shanghai shares recently, with many eyes on China playing a central role in helping to pull the global economy out of recession.
  
• In trading so far this morning, the pound has already dipped over a cent and half, but analysts say that high-yielding currencies will need further strong data supporting expectations of economic recovery in order to push higher.
  
• New Zealand’s Trade Balance figure for July will be released today at 23:45BST, with forecasters predicting a much improved figure from June.

Sterling slows its slide vs the aussie

The pound began to cap its downward spiral against the aussie yesterday, falling just 0.04% to close the day at 1.9555.

• Positive economic data from the US maintained the feeling that the global economy is on the mend with investors buying into higher-yielding “riskier” currencies at sterling’s expense.
  
• Better-than-expected Australian construction work spending supported the aussie’s gains and bodes well for next week’s second-quarter gross domestic product reading.
  
• However, the Australian currency held relatively steady overnight, hovering near its 13-year high against sterling.
  
• Its failure to climb higher has some worried that the aussie may be increasingly over-bought against the pound with a rally in riskier assets possibly slowing.

Euro pars recent losses vs the dollar

The single currency slowed its descent against the greenback yesterday after a positive US consumer confidence rating spurred a slight return for “riskier” investment.

• Reports showing a rise in US consumer confidence and an increase in prices for US homes for a second consecutive month in June boosted risk sentiment, assisting the euro.
  
• In addition, the appointment of Ben Bernanke as chairman of the Fed to a second term contributed to a rally in stocks, helping to stimulate demand for the single currency.
  
• Analysts say that Bernanke’s appointment should prove supportive of risk, and therefore benefit the euro, as it will likely ensure that the current monetary policy stance remains stable.
  
• The euro has recovered its losses from the past couple of days this morning as investors continue to digest yesterday’s data.
  
• The euro could further its gains today with the Ifo Institute’s report on German business confidence, due at 09:00BST, forecast to rise for a fifth consecutive month, adding to evidence that the recession in the eurozone is abating

Pound continues to tumble against the dollar

Sterling tumbled for a fifth consecutive day against the greenback yesterday losing a further 0.4% to close the day at $1.6349.

• Sterling briefly rebounded against the dollar yesterday following an afternoon recovery in global stock markets, but the pound was unable to hold its value.
  
• As stock prices continued to rise, the pound failed to post gains, which strengthened the argument that investors are now beginning to take long positions in the dollar.
  
• Elsewhere, a better-than-forecast consumer confidence rating released in the US yesterday did not prompt selling pressure on the greenback, with the pound losing further ground following the announcement.
  
• Data for both the Core Durable Goods Orders and New Home Sales in the US is released today at 13:30 and 15:00BST respectively. There are no major economic announcements in the UK.

Sterling hits 11-week low of 1.1386 vs euro

Sterling hit a 10-week low of 1.1410 against the single currency yesterday, as investors remained cautious of the risks inherent in the current UK economy.

• A choppy trading session in the stock market yesterday eventually saw the FTSE closing up at 4916.8 (0.42%) but this failed to stimulate demand for the sterling which continued to lose ground against the euro.
  
• Indeed, as global equity prices rose, it was the euro which benefitted, with investor sentiment still acknowledging the positive economic figures emerging from the 16-country region.
  
• The pound also lost value on speculation that a UK report later this week will reveal that house prices rose at a slower rate in August, supporting the case for the BoE to keep borrowing costs low.
  
• So far this morning, investors have continued to dump the UK currency after the yield on the two-year gilt hit its lowest ever level.
  
• In the eurozone today the results of the German Ifo Business Climate survey are released at 09:00BST, which could have a significant impact on the currency markets

Bernanke for second term appointment

US President Barack Obama will nominate Ben Bernanke to a second term as chairman of the Fed today, seeking to retain his services in steering the world’s largest economy out of its deepest downturn since the 1930s. Bernanke’s appointment though will need to be confirmed by the Senate where he has faced criticism from certain lawmakers who feel that his policies of lowering the interest rates to near zero and flooding the financial markets with over a trillion dollars have been an over-extension of Fed support that will be difficult to unwind, threatening future inflation. However, most investors have given Bernanke, whose current term expires on January 31st 2010, high marks and widely anticipated his reappointment.

Sterling continues to sink lower vs kiwi dollar

Sterling continued to sink lower against the kiwi yesterday as investors’ risk appetite was spurred on by bullish equity markets.

• The pound fell 1.4% to a midday low of 2.3836 against the New Zealand currency on Monday as strong European stock markets enhanced demand for the higher yield currency.
  
• Sterling did recover some if losses in the evening but still closed the day below the 2.40 mark.
  
• The kiwi has continued to push higher against this morning following another improved inflation figure of 2.3%.
  
• The FTSE 100 has also had a poor start day, losing nearly 0.5% in early trading which has put further selling pressure on the pound

Sterling plummets to 13-year low vs aussie dollar

Sterling plummeted to a thirteen-year low of 1.9503 against the aussie yesterday as investors were encouraged into high risk currencies.

• The pound has fallen by 2.2% in just four days against the Australian dollar as risk sentiment was buoyed by strengthening global equity prices, many of which hit their highest points of the year yesterday.
  
• However, during Asian trading hours the Australian dollar dipped as struggling stocks curbed demand for riskier currencies, with both the Nikkei 225 and the Shanghai Composite falling.
  
• One analyst has said that UK financials continue to outperform Australian resource stocks, which could point to near term gains for sterling against the aussie.
  
• In trading so far this morning, the pound has begun to cap some of its sharp losses as investors continue to recoil from weak Asian stock prices.

USD claws back losses vs euro

The single currency capped its gains from last week against the greenback yesterday, closing the day marginally down at 1.4302.

• The greenback clawed back losses against the single currency yesterday as investors took profits from four days of gains following a raft of positive economic data emerging from the eurozone.
  
• Having initially fallen in early trading, the single currency pared some of its losses against the greenback on Monday after eurozone industrial orders came in much higher than expected.
  
• Eurozone industrial orders rose 3.1% in June from the previous month, up much more than the 1.5% gain that had been forecast.
  
• In trading this morning, the dollar has continued to recover its losses following a lacklustre day on Wall Street that dulled risk sentiment.
  
• The Standard & Poor’s Case/Shiller report on US house prices for June is due for release at 14:00BST, as is a report on US consumer confidence an hour later. Both will be watched for clues about the economic recovery.

Light data day causes pound to weaken vs. USD

In a day devoid of any major economic data releases, the pound struggled to hold its value against the greenback yesterday, eventually losing nearly a cent to close at $1.6415.

• Despite the continued growth in global stock prices, the pound failed to post gains against the greenback, with analysts saying that sterling would remain under broad selling pressure in the short-term on the view that the BoE is delving deeper into quantitative easing than other central banks.
  
• The dollar, which usually declines when risk sentiment picks up, gained significant ground against the pound, which has led some analysts to suggest that risk reward is gradually moving in favour of long dollar positions on expectations for a stronger US recovery.
  
• The dollar’s resistance also comes as investors shy away from bold risk taking activity before a week of important economic data releases.
  
• US consumer confidence data, released today at 15:00BST, will give analysts a further indicator into current investor behaviour.

Pound falls to 11-week low vs. euro

Bullish global equity markets were unable to prevent the pound from falling to an 11-week low of 1.1461 against the euro yesterday before eventually closing at 1.1475.

• Sterling continued to slide against the single currency, stung by the view that UK interest rates will stay low as the economy struggles, while strong eurozone data boosted optimism about the pace of that region’s recovery.
  
• Eurozone industrial orders came in much higher than expected, rising 3.1% in June from the previous month, beating forecasts of 1.7%, and helping to extend the euro’s gains.
  
• Although the FTSE rose by a further 0.9% yesterday, aided by a UK survey revealing a record surge in confidence among business professionals, the bull market failed to strengthen the pound.
  
• Traders will be keenly listening to the words of BoE Deputy Governor Charles Bean, who speaks today at 17:15BST, for clues about future economic policy. There are no major announcements in the eurozone today.