Kiwi strenghtened broadly yesterday, but the pound has stemmed its losses in trading this morning

Better-than-expected GDP figures in the US caused risk appetite to surge across the board enabling the kiwi to post gains of over a cent against the pound.

• The solid GDP figure in the US renewed optimism about recovery in the global economy, prompting investors to buy higher-yielding currencies.
  
• The kiwi, which has suffered recently on a rise in risk aversion, was able to reverse losses as the positive data encouraged investors to buy up riskier assets.
  
• However, in trading this morning, the pound is recouping losses, pushing the price back near 2.27 as market participants return their thoughts to the RBNZ's rate statement on Wednesday where they indicated that interest rates would not be raised for some time.

With the US exiting recession, investors moved into higher-yielding assets bossting the aussie

The aussie dollar reversed recent losses yesterday after positive US GDP data encouraged investors to buy-back into perceived riskier currencies.

• The aussie pulled back nearly two cents, or 1.0%, bringing the sterling/aussie pair back down to trade around 1.80 as the data spurred demand for risk.
  
• Investors have been cashing profits in the Australian currency recently as global equities took a downturn, but yesterday's figure saw traders revive long positions in the aussie.
  
• Analysts noted that the figures were a near-perfect combination for riskier assets: strong enough to encourage those with an optimistic outlook on the financial markets, but not too strong to generate expectations of accelerated monetary tightening from the Federal Reserve.
  
• In trading this morning, the pound has halted its fall and is currently trading up around 0.2% with price hovering above 1.8100.

Euro clawed back recent losses as investors moved into the "riskier" currency

The dollar snapped four days of gains against the euro as the US economy returned to growth in the three months through September, officially exiting recession.

• The US government's advance estimate showed gross domestic product grew at an annualised rate of 3.5% in the third quarter, the first rise since the second quarter of 2008, which beat expectations for a reading of 3.3%.
  
• The data reduced the safe-haven appeal of the greenback, encouraging investors to sell their dollar holdings in favour of growth-linked currencies, enabling the euro to climb over a cent on the day.
  
• Analysts did note however, that concern may still linger over whether the US economy will be able to sustain this level of growth as the government begins to unwind its stimulus packages.
  
• In addition, trading yesterday saw the European Commission's economic sentiment indicator post a bigger-than-expected October rise. The index for the eurozone rose to 86.2 from 82.8 in September, beating expectations and lending support to the single currency's rally.

Positive GDP figures in the US drove dollar selling yesterday enabling the pound to gain

Sterling extended its rally, briefly climbing above $1.66 as the dollar sold off broadly after strong economic growth data spurred demand for riskier assets.

• In early trading, the pound found support from data that showed UK mortgage approvals for September increased to their highest level since February last year, exceeding market forecasts.
  
• Risk appetite was buoyed further in the afternoon after a report showed the US economy returned to growth in the third quarter, boosting stocks and reducing the appeal of the relative safety of the greenback.
  
• The US economy in the third quarter grew by 3.5% on an annualised basis, beating market expectations of a 3.3% rise and easing recently voiced concerns over the strength of the US recovery.
  
• Analysts noted that with the US GDP figure meeting market expectations, market players returned to using the dollar to fund carry trades, driving the US currency lower.
  
• The gains of 1.0% helped propel sterling toward its first monthly advance versus the dollar since July.
  
• However, gains were capped as the Labor Department revealed that unemployment claims inched lower in the week to 530K but missed forecasts of a drop to 520K.

Pound extended gains against the euro, buoyed by positive economic data

The pound continued to rally yesterday and is now poised to snap a three-month decline versus the euro, as the UK showed positive economic signals.

• Data from the Bank of England revealed that UK net consumer lending rose less than expected in September but the number of loans approved for house purchases did hit its highest level in 18- months.
  
• Mortgage approvals rose to 56,215 from a revised 52,970 in August, which is the highest level of approvals since February last year and marks a solid recovery from September 2008 when only 33,419 mortgages were approved.
  
• The more positive data saw traders trimming excessive short positions in the pound, enabling the UK currency to briefly extend gains over 1.12, and suggesting that the markets may have overreacted to the surprisingly weak GDP data last week.
  
• Analysts noted that the UK currency also benefited as the euro fought to stem its broad slide this week, as traders saw the slump in global equities earlier in the week as a sign to sell the single currency.

Kiwi suffered a severed setback following the RBNZ rate statement yesterday evening

In a poor day for the kiwi dollar, the pound rose by over seven cents, or 3.1%, against the kiwi, reaching a one-month high as traders withdrew long positions.

• A slide on Wall Street and on European share indices, led by declines in the energy and banking sectors, accelerated a sharp fall in the "riskier" kiwi dollar.
  
• This was compounded after data revealed an unexpected fall in US new home sales for September, which, as general sentiment was that the housing sector was on the mend, raised concerns in the market, sapping demand for the kiwi.
  
• The New Zealand currency was further undermined in the evening, diving two cents, after the central bank dampened expectations of an early rate rise.
  
• The RBNZ left rates on hold at 2.50% as expected and moved to a neutral bias. But it added in its statement that it expected to leave rates on hold until the second half of 2010, against expectations of a rise later this year.
  
• In trading this morning, the kiwi has pulled back slightly, though the price remains up around 2.2650.

Aussie was broadly sold yesterday as investors withdrew riskier positions

The pound advanced by 2.3% against the aussie as risk appetite stumbled in the wake of weak US economic data and a steep slide in global equities.

• In the early session, Australian inflation data was revealed to be slightly below expectations, leading investors to pare bets that the Reserve Bank of Australia will decide on a hefty interest-rate hike next week.
  
• The consumer price index rose in the third quarter by an annual 1.3%, the smallest gain since the second quarter of 1999, after advancing 1.5% in the previous three months.
  
• In addition, the price of gold continued to fall in trading yesterday, finding resistance around $1030 per ounce, which dulled demand for the commodity-driven currency.
  
• The pound was able to reach a three-week high of 1.8290 as investors shed their risky assets yesterday, and the pound could advance further if the US GDP data, released later today, disappoints market expectations.

Weak US data enabled the US dollar to continue clawing back losses against the euro

The single currency slipped further away from recent 14-month highs against the dollar yesterday, losing nearly a cent to close down at 1.4707.

• The US dollar rose, stretching a rally against the euro to a fourth day, supported by weak U.S. economic data that weighed on equity markets and led investors to seek safety in the greenback and cut exposure to assets perceived as risky.
  
• Initially though, the euro pared early losses after data showed core US durable goods orders were better-than-expected in September.
  
• The report revealed that the core figure, which excludes transport equipment, rose by 0.9%, higher than forecasts of a 0.6% rise, strengthening risk appetite in the market.
  
• However, in the afternoon the euro extended losses after further data showed that US home sales unexpectedly fell, declining 3.6% last month to an annual rate of 402,000, disappointing market forecasts that expected a 2.6% rise.
  
• Analysts noted that the soft housing sales figure offset positive durable goods orders, given that the latter data is generally volatile and sometimes does not represent the whole economic story.
  
• In trading today, investors will be eagerly awaiting US 3rd quarter GDP data, released at 12:30.

Sterling edged up against the dollar and is currently consolidating over 1.64 ahead of US GDP data

Sterling closed marginally up against the US currency yesterday, although the price was pulled back significantly following weak US housing data.

• In early trading, the pound lost ground to the dollar as falls in equity prices encouraged investors to trim their exposure to perceived higher risk currencies.
  
• UK stocks slid to a three-week low, helping to push the price down to 1.63, well under a level just below 1.67 reached only a week ago.
  
• The pound was then able to make slight gains in the afternoon after positive durable goods data weakened dollar demand, but the pair found resistance at 1.64.
  
• This data was then offset in the afternoon after it was revealed that sales of new homes in the US declined in September, against analyst expectations of a slight increase, which supported an upside movement
  
• In trading today, markets will take direction from the US third-quarter GDP figure at 09:30, which is predicted to show a growth rate of 3.3%. Should it undershoot this forecast, investors are likely to move back into the dollar.

Falling global equities enabled the pound to post gains against the euro

The pound continued to advance against a broadly weaker single currency yesterday, hitting a six-week high of 1.1167 as investors trimmed their euro holdings.

• Preliminary CPI data from Germany revealed that consumer prices remained flat on the year in October. Monthly data showed that the index did rise by 0.1% in October from September, though this rise failed to garner support for the euro.
  
• The markets also saw a slight withdrawal of risk activity yesterday as weak housing data in the US renewed concern over the health of the global recovery.
  
• The data dragged European equities down to three-week lows, which appeared to impact more severely on the single-currency, enabling the pound to gain.
  
• This morning, the pound is consolidating its position above 1.1100, with analysts reiterating that sterling is likely to remain in a holding pattern until next week’s BoE asset purchase decision.
  
• Investors are cautious amid uncertainty over whether the Central Bank will extend their quantitative easing programme, and so sterling movements may continue to be dictated by risk appetite in over the coming days.

Sales data took the pound higher against the kiwi, continues to climb in trading this morning

The pound made up further ground on the kiwi dollar, gaining 0.65% after positive sales data supported evidence that the UK economy is still on the road to recovery.

• The sales data, which came in above market forecasts, encouraged investors to buy back into the UK currency, with the price briefly reaching above 2.20.
  
• Conversely, selling pressure remained on the New Zealand dollar after the nation's Prime Minister expressed concern over the currency's strength, and stated that there were few tools with which to deal with it.
  
• Higher-yielding currencies were also under pressure overnight as Asian equities turned negative, with Nikkei 225 losing over a percent, dulling demand for "riskier" assets.
  
• In trading this morning the pound has continued to rally, rising to a three-week high over 2.22 as a New Zealand business confidence survey unexpectedly undershot forecasts, weakening the possibility of a hawkish RBNZ rate statement to be made this evening at 20:00.

The pound continues its rally against a broadly weaker aussie

Sterling edged up against the aussie yesterday, benefiting from improved UK sales data, which supported claims that the UK economy is recovering.

• On Monday evening, MPC member Adam Posen, following negative GDP data, stated that there were still signs of an economic recovery even if Britain is behind other countries in pulling out of the recession.
  
• His statement found support yesterday after the UK CBI sales showed month-on-month improvement, beating market expectations and buoying demand for the UK currency.
  
• The UK currency has pushed higher in trading this morning after investors pared bets of a steep rate rise in Australia after inflation data did not increase by as much as some had anticipated.
  
• The quarterly CPI figure came in at 1.0%, which tilted the markets away from pricing in a more aggressive upward rate movement at the next RBA meeting on Nov 3 rd.
  
• Currently the pair are trading around the 1.80 level, just below a three-week high for the pound.

US dollar continues to push higher against the euro, as consumer confidence stumbles

The dollar rose against the single currency for a third consecutive day in its longest advance since August, as a report showed US consumer confidence fell this month.

• The euro struggled in trading yesterday after data showed that public sector lending in the eurozone declined by 0.3% in September compared to this period last year.
  
• The figure raises concern that there are still few signs that the ECB's unlimited provision of liquidity to banks is prompting any pick up in eurozone broad money lending, which could put pressure on the single currency.
  
• The euro then continued to slide, after data revealed that US consumer confidence unexpectedly fell in October as fears about future job prospects increasingly preyed upon the American public.
  
• The index fell to 47.7 from 53.4 in September, disappointing market expectations of a rise and spurring a return to perceived safety of the greenback.
  
• In addition, traders noted that as the single currency breached a key technical level at $1.4850, stop-losses were triggered, which pushed the single-currency to a two-week low of $1.4773.

Pound edges higher against a stronger dollar, which found support from weak consumer sentiment

Sterling closed up against the dollar yesterday, but slipped back nearly a cent from its intra-day high after a survey showed that consumer confidence in the US disappointed market expectations.

• In early trading, the markets continued to take the pound higher with analysts noting that long term investors and Asian reserve managers were attracted by sterling's one-week low.
  
• This trend was maintained as the UK CBI retail sales index advanced to a balance of +8 in October from a balance of +3 in September, the largest advance since June 2007, beating forecasts.
  
• There was also support for the UK currency as the oil giant BP reported third-quarter profits of $4.98bn (£3bn), which experts said "obliterated" market predictions.
  
• However, the dollar trimmed its losses in the afternoon after a survey revealed that US consumer confidence dropped in October. The index produced a figure of 47.7, substantially less than the 53.7 forecast, which cautioned traders against risky investments.
  
• The weak report bodes ill for the US economy indicating restrained consumer spending, and suggests that the recovery is not as entrenched as initially thought.

Pound pushes up against the euro, spurred by positive sales figures

Sterling pushed back over 1.10 in trading yesterday as data revealed a pick-up in UK realised sales dulling concerns over the health of the British economy.

• The pound continued to recover last week's losses as the UK CBI realised sales index revealed a significant monthly increase in sales volumes, beating market forecasts.
  
• Conversely data also showed that lending to the eurozone's private sector declined in September compared with the same period a year earlier, highlighting notable constraints on financing to companies and households that could damage the region's economic recovery.
  
• Private-sector lending decreased 0.3% in September, after rising by an annual rate of 0.1% in August, data from the ECB revealed.
  
• In addition, traders noted good demand for sterling from longer term investors and Asian reserve managers who were keen to sell the dollar following the US currency's sharp gains in the previous session.
  
• However, the pound remains range bound, slipping back marginally this morning, as investors remain cautious after MPC member Adam Posen in his speech on Monday evening reminded market players that UK officials may maintain stimulus programs in order to cement the recovery.

Kiwi struggled as the PM highlighted the problems inherent with a strong currency

The kiwi dollar came under pressure yesterday following dovish comments from the PM, enabling the pound climb two and a half cents, closing at 2.1845.

• The kiwi dollar underperformed after the country's Prime Minister John Key said New Zealand is concerned over the strength of its currency, but has few tools at its disposal to deal with it.
  
• The statement concerned investors as it lessened the chance of the RBNZ raising interest rates in the near future as some traders were expecting.
  
• In trading this morning the pair are trading steadily around last night's closing price, with investors now turning their focus the NZ interest rate decision on Wednesday evening.
  
• Although rates are likely to hold, the accompanying statement will give policymakers a chance to elaborate on comments made about the relative strength of their currency and enable investors to gauge possible rate movements in the future.

Sterling made gains against the aussie as the price of gold fell back

The pound posted gains against the aussie yesterday, reversing its steep fall at the end of last week as investors cashed profits, closing up 0.8% at 1.7822.

• The aussie was broadly weaker in trading yesterday as investors took the opportunity to take profits following sharp gains made on Friday.
  
• The price of gold also continued to fall yesterday, discouraging investment in the commodity linked currency. Gold quoted around 1053/oz yesterday, though probably due more to profit taking than lack of strength.
  
• In trading this morning, the aussie is slightly up on the day, though investors are likely to remain wary ahead of sales data in the UK and a consumer confidence survey in the US
  
• In addition, investors may well caution against long positions ahead of Thursday when the US 3 rd quarter GDP figure is released. The economy is forecast to have grown by 3.3% in the quarter, though if it undershoots this target it could trigger a wave of selling in riskier currencies.

The dollar is recovering losses against euro on speculation that the Fed may signal a tightening of monetary policy

Having traded strongly against the dollar in the early session, the euro surrendered gains in the afternoon session, pulling the price down sharply to close a $1.4873.

• Initially, the greenback hit a fresh 14-month low versus the euro after the Beijing-based Financial News revived concern over the status of the dollar, stating that China should raise the amount of yen and euros held in its foreign-exchange reserves.
  
• However, the dollar pared its losses after the author of the report said that it was purely a "personal view".
  
• In addition, the issue of diversification has been a topic for quite a while and the impact of the news was short-lived. Analysts noted that investors were particularly short on the dollar already and were cautious about over-selling.
  
• In the afternoon, the Chicago Fed announced that its Midwest Manufacturing Index rose 1.0% in September offering more evidence that the US economy is digging itself out of the economic slowdown and lending support to the greenback.
  
• The single currency lost further value with the US stock markets opening in the red, which in turn pulled European equities negative, discouraging euro investment.

Sterling is rebounding against a broadly weaker dollar

Further doubts over the dollar's reserve status stoked selling in the US currency yesterday, enabling the pound to recover some of Friday's heavy losses.

• The greenback lost ground broadly after an article stated that the People's Bank of China may be considering raising the share of the euro and the yen in its foreign exchange reserves, though the dollar should still remain dominant.
  
• However it was later revealed that the article was merely the author's "point of view," which capped sterling's gains, as investors checked their dollar selling.
  
• In addition, the pound found support as declines at the end of last week were seen by some investors as over-stretched, suggesting that the market has oversold sterling.
  
• However, as the US markets came online, global stocks took a dive into the red, enabling the haven currency to trim its losses.
  
• Analysts noted that given the huge amount of bearish trades on the dollar in recent weeks, a near-term dollar recovery could be on the horizon.
  
• In trading today, investors will be looking for direction from sales data in the UK, released at 11:00, and a consumer confidence survey in the US, released at 14:00.

The pound rebounded strongly vs the euro yesterday with analysts suspecting that sterling could be oversold

After an unsteady early session, the pound rebounded strongly from Friday's sell off, to close 1.1% up.

• The pound recovered steadily through the day after data revealed that the German Gfk consumer sentiment indicator dropped to 4.0 from 4.2 in October, weaker than the median forecast of 4.5, dulling demand for the single currency.
  
• In addition UK business confidence rose to the highest in 18 months, according to a third-quarter survey, with 19% of executives polled saying the outlook for business is "good" or "very good," up from 9% in the previous quarter, which stoked demand for the pound.
  
• Analysts hypothesised that the pound may be considerably oversold at its current value, which does present a good opportunity for British businesses.
  
• Analysts also noted two opposing arguments developing: the first is a widely held view that based on better PMI survey data there is a good chance that GDP data for Q3 will be revised up.
  
• The second is the growing certainty that the BoE will announce a step up in QE at next Thursday's policy meeting. The offsetting nature of these views may contain volatility in the approach to the November 5 th policy meeting.

Sterling halted its recent rally and is slipping back sharply against the kiwi as UK GDP figure disappoints

The pound was broadly sold on Friday following a weak GDP figure, losing three cents to the kiwi dollar, to close back down at 2.1607.

• Data revealed that Britain's economy has now shrunk for six quarters after it contracted by 0.4% in the most recent quarter, the longest period of contraction since records began in 1955.
  
• Analysts have now renewed their discussion over the possibility of the Bank of England retaining, or even extending, its £175 billion QE programme, which would compound sterling's weakness.
  
• The news also confirmed that the BoE are likely to keep the benchmark interest rate at a record low of 0.5% firmly into 2010, lessening the appeal of sterling assets.
  
• In response, the markets took the kiwi nearer its multi-year highs hit earlier this month, and this trend has continued in trading this morning as investors continue to take their lead from Friday's data.

Aussie made significant gains at the end of last week and is continuing to advance this morning

In trading on Friday, the pound slipped back from two-week highs around the 1.8000 level against the aussie as a weak GDP figure dulled demand for the UK currency.

• A report showed that the UK failed to exit the recession in the third quarter of this year, giving the central bank more reason to keep enacting emergency measures to spur growth.
  
• The data showed that the UK contracted by a further 0.4%, disappointing expectations of a 0.2% expansion and firmly halting the pound's progress.
  
• Where as in Australia interest rates have already been raised on the back of growing confidence in the economy, the UK may now be considering further loosening its monetary policies as recovery struggles to take hold.
  
• In trading this morning, the pound continues to fall, currently down 0.4% after the aussie received a boost from a Chinese report that suggested authorities were looking to diversify the country's foreign exchange reserves.
  
• The report suggested that China may look to buy up euro's and yen, which analysts said could also spill over into the aussie providing further demand.

The single currency pared recent gains on Friday, but has recovered in trading this morning

The single currency slipped back from multi-month highs against the dollar following positive US housing data, with the pair closing the week at 1.5006.

• The US dollar found support after a report showed that US existing-home sales improved more than expected last month.
  
• Resales of US houses jumped 9.4% in September to a seasonally adjusted annual rate of 5.57 million, the highest rate in more than two years, which stemmed the recent broad dollar sell off.
  
• Analysts stated that the recent bout of euro strength could now be looking over-stretched, given huge accumulation of short positions on the dollar.
  
• In addition, the single currency came under pressure at the end of last week after Henri Guaino, right-hand man of President Nicolas Sarkozy said that, "the euro at $1.50 is a disaster for the European economy and industry," reaffirming the recent sentiment of the ECB.
  
• However, the dollar has fallen to a fresh 14-month low against the euro in trading this morning after a Chinese central bank researcher called for moving some of the country's massive foreign reserves into euro and yen holdings, weakening demand for the US currency.

Sterling fell back significantly against the dollar on Friday, as GDP figure disappoints the market

Sterling lost three cents (1.9%) to the dollar, as a weak UK quarterly GDP figure abruptly halted the pound's recent rally.

• The greenback gained the most daily value against the pound in a month as the UK's economy unexpectedly contracted in the third quarter, giving the Bank of England more reason to expand emergency measures to spur growth.
  
• It is the first time UK gross domestic product has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.
  
• The pound fell more than a cent against the US dollar following the release of the figures, losing 0.6% in two minutes, with traders particularly concerned that the UK may turn out to be the only major economy still in recession.
  
• The unexpected decline in the services sector was the key factor behind the drop. The UK economy's reliance on the service sector, and financial services in particular, may be the reason why it is still in recession when partners such as France and Germany exited earlier in the year.
  
• This suggests that the likelihood of an expansion in quantitative easing by £50bn or so over the next quarter is rising, which will put further pressure on the pound.

UK economy contracted by 0.4%, which has and will continue to weigh heavily on sterling

In an uncertain day for the UK economy, the pound lost as much as 2.0% to the euro on Friday, sharply reversing its recent rally to close down at 1.0862.

• Data revealed that the UK economy unexpectedly contracted by 0.4% between July and September this year, confirming that the UK is still in recession.
  
• Quarterly growth of 0.2% had been expected, although expectations had been tempered by recent figures showing no growth in retail sales in September and a 2.5% decline in industrial output in August.
  
• Importantly, the disappointing GDP figures may now lead the Bank of England to consider the possibility of extending their asset purchase scheme in their November meeting in order to sustain the evidently fragile recovery.
  
• Recent comments from policymakers had led markets to believe that the UK would be tightening monetary policies, however the tone is likely to be quite different following Friday's GDP figure.
  
• In trading this morning, the pound remains under pressure with investors continuing to sell the UK currency following last week's disappointing data.

UK GDP contracts by 0.4% - pound dives

Data this morning has run significantly against market expectations, confirming that Britain is still in a recession. The UK’s third quarter GDP figure was revealed to be a 0.4% contraction, which now means that the UK has suffered 6 consecutive quarters of negative growth. Market participants had speculated that the UK economy would grow by 0.2% in the months from July to September and had taken the pound slightly higher this morning.

There has been data recently though that points to this disappointing figure. Data in early Ocotber revealed that manufacturing production had fallen by 1.9%, significantly below forecast and this has clearly weighed heavily on overall output. In addition, yesterday's UK retail sales figures, showed that there was no growth in High Street activity in September, which was a further warning that the economy may not yet be expanding.

Investors will now be looking ahead to the Bank of England’s next policy meeting on the 5th November, where the members will have to seriously consider the possibility of extending their asset purchase scheme. Recently, we have seen G20 countries preparing to make steps to remove monetary stimulus measures as the global recovery strengthens, however the BoE still clearly has a long way to go before such steps can be taken. Even dovish market participants were not expecting Britain’s economy to have contracted by as much as 0.4%, a figure that truly underlines the fragility of the recovery.

As the news was reported, the pound dropped a full percent against both the euro and the dollar, as investors hurried to sell their sterling. Looking to the short and even medium term, the UK currency will remain under heavy selling pressure, with confidence in the economy shot. That we are still in a recession and with the possibility of further QE now back on the horizon, investors will see little hope of an interest rate rise in Britain even into 2010, which will heavily on the value of sterling.

The kiwi edged higher against the pound but has weakened this morning following important Chinese data

Having given up ground to the UK currency in early trading, the kiwi rallied steadily through the afternoon, to close marginally up at 2.1833.

• The pound found support yesterday after the BoE’s policy minutes revealed no direct discussion over further loosening the current monetary policy.
  
• In the wake of the news, sterling posted an intra-day high of 2.2074 as investors grew more confident in the outlook for the UK economy.
  
• However, the New Zealand dollar capped its losses as Alan Bollard, governor of the Reserve Bank of New Zealand, in a speech appeared surprisingly reserved over the recent appreciation of the kiwi dollar.
  
• Mr Bollard said that kiwi strength was “not necessarily an obstacle to raising the cash rate,” encouraging investment in the higher-yield currency.
  
• In trading this morning, the New Zealand dollar has weakened, enabling the pound to advance back towards 2.20, as Chinese data failed to do more than meet market forecasts, giving traders a reason to cash profits.

Pound continued to climb against the aussie yesterday as confidence in the UK economy improved

A broadly stronger pound hit a two-week high against the aussie, briefly rising over 1.8000, as confidence in the UK economy gained momentum.

• Sterling jumped following the minutes from the Bank of England’s latest policy meeting, which dampened expectations of an extension to quantitative easing.
  
• The minutes appeared to move the balance of market expectations to the possibility of a pause of the government’s asset purchase scheme in November, reversing recent speculation.
  
• In addition, the aussie dollar found its strength undermined as commodity prices, most notably oil, turned lower, discouraging investors from the higher-yielding currency.
  
• In trading this morning the pound has continued to advance, reaching back over 1.80, as investors cut long positions in the “riskier” currency after Chinese data dashed expectations of some who were betting on a positive surprise.
  
• The most significant figure, the Chinese 3rd quarter GDP, revealed a growth rate of 8.9%, bang in line with expectations, however there had been hopes of over 9.0%.

Euro managed to push through $1.50, but has slipped this morning following mildy disappointing Chinese data

The single currency resumed its upward march against the greenback yesterday, finally broaching the 1.50 mark, to close up half a cent at 1.5015.

• In early trading, the euro retreated from near 14-month highs as some investors bet European policy makers would say they are still concerned that the euro’s strength will harm the economic recovery.
  
• Analysts also said that the single currency’s sharp fall against the pound weighed on the euro/dollar price, which has recently remained anchored just below the $1.50 level.
  
• However, the dollar relinquished its gains in the afternoon as rising U.S. equities encouraged enough risk appetite to push the single currency to the highest level since last August.
  
• In trading this morning, the single currency has once again slipped back as solid data from China gave traders a reason to take profits.
  
• Analysts have noted, though, that the dollar is likely to continue to broadly weaken as sentiment towards the US currency remains downbeat on the prospect of sustained low US interest rates.

Sterling made substantial ground on the dollar yesterday as the BoE showed no sign of loosening montary policy further

Dollar selling in the market was stepped up with investors moving into the pound as the MPC minutes proved more positive than expected.

• The pound climbed over 1.66, posting a two and half cent gain against the dollar as the minutes from the Bank of England’s October monetary policy meeting struck a less dovish tone than recent comments suggested.
  
• Analysts said the most important story within the release was the fact that in the September meeting, governor Mervyn King thought an expansion of the central bank’s quantitative easing programme could be justified. But there was no mention of that in this latest meeting.
  
• Additionally, the pound was given further support after Mr King said in an opinion piece in Scotland’s Herald newspaper that, “it would be wise to take account” of the prospect of higher interest rates, heightening confidence in the UK economy.
  
• The dollar is up slightly in morning trading as a raft of Chinese data, though positive, failed to offer any major surprises, gaining in line with market expectations.

The pound posted a one cent gain against the euro yesterday, buoyed by the MPC minutes

Sterling reached a one-month high against the single currency, rallying strongly as the BoE’s latest policy meeting made no mention of further QE.

• The MPC minutes gave substantial support to the pound, which advanced 1.1% to reach a high of 1.1112, after they sounded a more positive tone than recent statements from policymakers suggested.
  
• It was revealed that the nine member committee had voted unanimously to leave the size of its asset purchase scheme unchanged at £175 billion, as had been widely expected, and made no direct reference to extending QE in the future.
  
• This perhaps suggests that the more positive macro news flow and the strength in asset prices may be moving the committee towards favouring a pause in quantitative easing at their November meeting.
  
• Later in the day, the pound capped its gains, consolidating below 1.11, with investors now awaiting retail data released today at 09:30BST.
  
• In addition, analysts noted that the eagerly awaited GDP figure on Friday could call a sharp halt to sterling’s recent rally should it fail to meet expectations of a 0.1% growth rate.

Sterling has resumed its recent upward trend against the kiwi, buoyed by brief market selling in high-yielders and by the MPC minutes

Sterling climbed over a cent and a half against the kiwi in trading yesterday as the market briefly turned bearish on higher-yielding currencies.

• The pound reversed losses incurred on Monday, but closed the day some way from its intra-day high of 2.2000 as investors held back from taking significant positions ahead of the UK MPC minutes released today.
  
• The kiwi dollar, which has broadly risen as the global economy shows increasing signs of recovery, fell back as demand for “riskier” assets stumbled following some weak economic data from the US economy.
  
• The US Producer Price Index revealed an unexpected monthly drop of 0.6%, with forecasts predicting a rise of 0.1%. Housing starts also disappointed market expectations, resurfacing concerns over the pace of US economic recovery.
  
• In response, global equities also halted their recent rally, which spurred a pull back from higher-yielding currencies, allowing the pound to gain.
  
• In trading this morning, the pound is broadly rising, sustained by the minutes from the latest UK MPC minutes, which revealed that a unanimous decision to keep QE on hold.

The pound is gaining against the aussie as risk appetite briefly dulls and sterling demand picks up

The pound posted gains against the aussie dollar yesterday as risk appetite waned slightly with weak data emerging from the US and equities slipping back.

• The US PPI unexpectedly decreased by 0.6% in September, disappointing expectations of a 0.1% rise, which raised concern over the strength of the US recovery.
  
• Data from the US housing market also fell below market forecasts, dulling investor appetite to buy into perceived “riskier” assets, weakening demand for the aussie.
  
• Sterling’s advance was relatively steady though, with the price rising less than 0.4%, as the broad strength of the Australian currency prevented traders from selling their investments in any great number.
  
• In trading this morning, the pound is climbing at a good rate, having been given momentum from upbeat MPC minutes, with the price currently over 1.79.

Lower equites, dulled risk appetite yesterday enabling the US dollar to post gains against the euro

The single currency slipped back from a fresh 14-month high against the dollar following further comments from the ECB that expressed apprehension over the euro’s strength.

• In early trading, options buying once again prevented the euro from pushing through the psychologically important $1.50 level, posting a high of $1.4993.
  
• The single currency was supported after further positive corporate earnings weighed on haven demand for the dollar, emboldening investors to sell the low-yielding US unit to fund the purchase of riskier, higher-yielding assets elsewhere.
  
• However the euro fell back as the ECB repeated their support for the US Treasury's self-professed strong-dollar policy, and expressed concerns over recent “volatile” trends in the market and the strength of the single currency
  
• In the afternoon Wall street slipped as tame US inflation data offset strong quarterly earnings from Apple, denting investor appetite to sell the low-yield dollar.
  
• The economic data, which showed that the US PPI unexpectedly dropped by 0.6% last month, disappointed market expectations and helped the greenback recover earlier losses, though analysts said that it would remain under pressure as long as stocks continued to show an upward trend.

Sterling edged down against the dollar yesterday, but is currently trading back over 1.65 this morning

Sterling capped its five-day upward trend against the dollar, falling back from a one-month high of $1.6487 as weak economic data supported the haven currency.

• In early trading, sterling held steady against the dollar after UK public finances showed a weak figure but better than market expectations, which offset the negative impact of news that Qatar are selling a significant stake in Barclays bank.
  
• Data showed a deficit reading of £14.8 billion bringing Britain’s public spending to its worst six months on record, however, the data was better than forecasts, which analysts said boosted sterling’s gains.
  
• In addition, the US dollar came under pressure as risk appetite continued to rise following encouraging quarterly earnings from US corporations, such as Apple and Caterpillar.
  
• The US currency found some support in the afternoon though after data revealed weaker than expected US PPI and housing starts figures, which were able to induce some haven demand for the broadly weak dollar.
  
• In trading this morning, the pound has resumed its upward trend against the greenback, currently up over a percent as the UK MPC minutes confirmed that the decsion not to extend QE was unanimous.

Pound slid back against the euro yesterday, but has rebounded strongly in trading today

Sterling dipped slightly against the single currency, relinquishing gains in the afternoon as US equities slipped back, closing the day down just 0.1% at 1.0958.

• In early trading, investors picked up on comments from the ECB President who added to remarks from other eurozone officials expressing worries about the strength of the single currency.
  
• In response the markets took the euro slightly lower, enabling the pound to reach up over 1.10, near Monday’s 3-week high.
  
• In addition, the pound gained slight support after the UK public spending deficit in September fell short of market expectations, buoying investor sentiment.
  
• However, the euro trimmed its losses in the afternoon as global equities turned negative and investors cautioned over taking long positions ahead of a speech by Bank of England Governor Mervyn King in the evening.
  
• In trading today, the pound has broadly strenghtned as the MPC minutes from their latest meeting sounded a relatively positive tone. Currently the UK currency is trading one percent up on the single currency, approaching €1.11.

Improving global economic sentiment continues to raise demand for kiwi assets, boosting the NZ currency vs the pound

The kiwi advanced over three and a half cents (1.6%) against the pound yesterday as investors showed renewed enthusiasm for risky assets.

• Rising commodity-prices and stronger-than-expected corporate earnings in the US have contributed to continued demand for higher-yielding currencies.
  
• In addition, investors are now pricing in that New Zealand’s central bank is likely to drop its monetary- easing bias at its meeting next week as economic data point to improvement.
  
• Although there has been speculation that the RBNZ has expressed concern that the strength of the kiwi is frustrating economic recovery, strong data has investors questioning whether the central bank can keep interest rates on hold until the middle of next year.
  
• In trading this morning, the New Zealand dollar has capped its gains, with the price currently hovering just above 2.17.

Aussie resumes its climb against the pound, but has capped gains this morning

The aussie dollar continued its upward trend yesterday, pushing on nearly one percent against the pound following bullish words from an RBA official.

• The Australian dollar rose as a Reserve Bank of Australia official said a move to “more normal” interest rates was appropriate, indicating that the yield gap may widen further.
  
• Philip Lowe, assistant governor of the RBA, also mentioned at the conference in Sydney that it was “appropriate” to remove monetary stimulus as the economy improves boosting demand for higher-yielding assets.
  
• The Australian currency also traded strongly during the Asian session with demand high as both the Nikkei and Shanghai Composite indices traded strongly.
  
• The RBA minutes from their most recent policy meeting, released early this morning, had a hawkish tone, which reinforced views of a steep interest rate hike next month.
  
• However, the aussie, which has broadly strengthened in response, is currently trading just marginally higher against the pound, with the price currently around 1.7650.

Euro pushes higher but finds strong resistence at $1.50

The single currency resumed its climb against the dollar in trading yesterday, supported by rising confidence in the global recovery, closing the day up 0.4%.

• The euro hovered just below the psychologically important 1.50 level as the US dollar remained under selling pressure on expectations that US interest rates will remain pinned at record lows well into 2010.
  
• The single currency also found support as some investors speculated finance ministers from the 16-nation region meeting in Luxembourg would focus on the currency’s strength.
  
• The dollar came under further pressure as the continued confidence over the prospects of a global economic recovery were reaffirmed as the Dow Jones opened up over 10,000, keeping haven demand for the dollar in check.
  
• Late in the afternoon, the Fed added to the greenback’s woes after stating that it has been testing its reverse repurchase agreement tool but is not about to use it, suggesting that US monetary policy is not set to tighten just yet.

Pound reached over $1.64 yesterday, but has slipped half a cent in trading this morning

Having traded in the red during the morning session, the pound rebounded back over $1.64, climbing for the fifth consecutive day and reaching a near one-month high of $1.6422.

• The pound initially fell against the dollar, relinquishing last week’s gains after the Sunday Times said Bank of England policy maker Adam Posen may support an extension of the central bank’s asset-purchase programme.
  
• Posen added that he was “not worried about overshooting inflation right now,” which many analysts have said will become an issue as the economy begins to grow.
  
• Last week, following the words of Mr Fisher, the market moved to discount a scenario where it was more likely that asset purchases would be paused. However, these comments suggest that the question of QE is still a finely balanced decision.
  
• Sterling was able to reverse its losses in the afternoon, however, after the US markets opened strongly, with Dow Jones edging over 10,000, supporting risk appetite in the market.
  
• The dollar has advanced in trading this morning with markets awaiting Producer Price Index data from the US, released today at 13:30BST.

Having held steady in trading yesterday, the pound has slipped back this morning as equity markets stumble

Sterling suffered early losses against the euro yesterday after a BoE member hinted that the QE programme should be extended, but the pound recovered to close the day on level footing.

• Adam Posen stated that the central bank should continue its quantitative easing programme as the financial system has yet to show signs of a sustained recovery.
  
• He added that he was unconcerned about the possibility of further monetary stimulus risking a rise in inflation.
  
• His comments appeared to eclipse positive house price data from property website Rightmove, which showed that asking prices for homes in England and Wales were up on an annual basis for the first time in more than a year in October.
  
• Posen’s dovish remarks contrast with those of fellow MPC member, Paul Fisher, who last week suggested that the BoE may be considering drawing its QE programme to a close.
  
• However, the UK currency rallied strongly in the afternoon, buoyed by surging equity markets, which took their lead from positive US corporate earnings.

Sterling traded strongly at the end of last week against the kiwi but has slipped back sharply this morning

Sterling managed to close last week at a near two-week high of 2.2056 against kiwi, as the UK currency continued to build on support from a BoE official.

• The ailing pound managed to build on Thursday’s gains, rallying a further 1.2% against the kiwi on Friday, in the wake of a Bank of England policy maker signaling satisfaction with the impact of the central bank's quantitative-easing strategy.
  
• Investors took the opportunity to take strong profits that had been built up earlier last week, taking the sterling / kiwi price back over 2.20.
  
• However, analysts warned that the fundamentals for the pound are still negative, with interest rate differentials favoring high-yielding currencies.
  
• This week's minutes of the Bank of England meeting may also reinforce the fragile nature of the economic recovery, and the likelihood of rates remaining at this low level for some time.
  
• Indeed in trading this morning, the pound has relinquished much of the ground it had recovered, already two cents down on the day as confidence remains high in the New Zealand economy.

Profit taking ahead of the weekend allowed the pound to make further ground against the aussie on Friday

Sterling maintained its rally as investors continued to lock in profits ahead of the weekend, with the price closing the day at 1.7839.

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• Having climbed to multi-year highs against the pound earlier last week, positive comments from members of the BoE concerning the quantitative easing programme triggered an opportunity amongst investors to take profit, driving the price higher.
  
• Comments on Friday were made that stated the asset purchase scheme is having its desired effect on the UK economy, dulling concerns about the possibility of a further expansion.
  
• There was also a slight pull back in demand for the higher-yielding aussie following a weak earnings report from the Bank of America, which gave investors further cause to cash profits.
  
• This morning, traders have resumed aussie buying, with analysts noting that despite some disappointing US corporate earnings, the market remains positive and high-yielders are still on a rising trend.

The single currency slipped back on Friday following weak Bank of America earnings

The US currency snapped a four-day losing streak against the euro, rising from a 14-month low, as investors cautioned their risk activity following further corporate earnings reports.

• The dollar strengthened as Bank of America earnings fell short of expectations, sparking profit taking in the euro, as well as higher-yielding currencies.
  
• The Bank reported losses of $1 billion in the third quarter, which sent equity markets down having rallied on the more positive earnings of other major US banks and corporations earlier in the week.
  
• This report aided the dollar, strengthening haven appeal and bringing the US currency up from multi-month lows against the euro.
  
• In addition, the greenback found support as data showed that US consumer sentiment eased in October, disappointing market expectations.
  
• One analyst stated that if the pound can bounce, then the markets must be wary that the dollar can also. The bounce in the UK currency increases the risk of a broad bounce in the dollar, even if it may only be a short- term reprieve.

The pound made further ground against the US dollar on Friday, buoyed by positive market sentiment

Sterling extended sharp gains against the dollar, as traders cut short pound positions after many reckoned earlier bets against the currency were overdone.

• Sterling found support following further upbeat comments from a BoE member concerning the quantitative easing programme.
  
• Sterling reached up to a three-week high against the dollar, peaking just below 1.64 before closing the week at $1.6353.
  
• Initially sterling trimmed its position after sterling/dollar stop-loss orders were triggered at $1.6300, but some analysts noted that the pound would continue to be supported as investors had taken up fresh long positions in sterling and were willing to hold onto them.
  
• Sterling also found support from recent M&A talk, with Qatar’s sovereign wealth fund planning a renewed offer for the supermarket chain J Sainsbury.
  
• Sentiment towards the US currency remained weak as optimism about the global economic outlook, buoyed by a string of strong US corporate results, turned people away from the greenback in favour of perceived riskier currencies.

Sterling continued to rally at the end of last week, but has relinquished gains in trading this morning

Sterling’s rally against the euro persisted on Friday, albeit with slightly less momentum, with the price closing the week at 1.0971, up 0.8% on the day.

• Sterling’s volatile run continued with a modest climb at the end of last week, as investors squeezed what more they could out of a rally that is expected to fade.
  
• Comments from BoE member Paul Fisher breathed some life into the pound, which has come under heavy pressure in recent weeks, when he stated that the quantitative easing programme is having its desired effect.
  
• His remarks built on those of Charles Bean earlier in the week and were seen as a departure from the Bank’s hitherto-drab assessments of the UK recovery and relaxed opinion of sterling’s decline.
  
• Investors reacted positively to the words, feeling that they may have been too quick to price in a further extension of QE into the market.
  
• In trading this morning however, sterling has slipped back, currently hovering just above 1.09, as investors resume selling the UK currency after another BoE member this time spoke of the need to continue the asset purchase programme.

Pound is rallying against the kiwi dollar as investors book profits ahead of the weekend

The pound achieved a ten-day high against the kiwi yesterday, as bullish comments combined with profit taking to bring the UK currency off multi-month lows.

• The UK currency was buoyed by comments that quantitative easing is in fact having its desired effect and that the MPC may not need to extend QE in their next meeting as many has speculated they would.
  
• The news triggered a wave of profit taking, pushing the sterling/kiwi price up two and half cents on the day to close at 2.1849.
  
• There was positive news from the US yesterday in the form of corporate earnings, in particular, Goldman Sachs and Citigroup, but the rise in risk appetite failed to assist the higher-yielding currency as investors chose instead to lock in profits.
  
• The pound has extended its climb in trading this morning, currently edging back over 2.19 as investors continue to profits ahead of the weekend.

Sterling is currently trading higher against the aussie following upbeat comments and a move to cash profits

Sterling recovered some of its recent extensive losses against the aussie dollar yesterday, climbing over two cents, to close up at 1.7668.

• Bank of England member, Paul Fisher, said yesterday that policy makers would be more likely to pause asset purchases in their upcoming meeting in November, giving themselves the option of “doing more later,” rather than stopping them.
  
• His comments were taken to read that the MPC is unlikely to extend their quantitative easing programme, supporting a slight rise in confidence in the UK economy, strengthening the pound.
  
• In broad terms, the aussie traded strongly against most currencies yesterday as positive economic data in the US led to investors adding to their long positions in the higher-yielding currency.
  
• Indeed in trading this morning, the pound has halted its climb, with the pair currently holding around the overnight closing price, as enduring aussie strength offsets sterling’s rally.

Positive economic data supported euro gains vs the US dollar yesterday, but the price has pulled back this morning

The single currency pushed higher once again as the greenback suffered from rising appetite in the wake of positive economic signs.

• The dollar initially made after ECB President Trichet said that the US government and the Federal Reserve should pursue policies supporting a strong dollar and that excessive foreign-exchange volatility is an “enemy.”
  
• However the euro trimmed its losses in the afternoon following positive US data, which bolstered expectations that the economy is recovering.
  
• US jobless claims beat market forecasts dropping a further 10K week-on-week. The US CPI figure also rose marginally to 0.2%, supporting growing optimism over the economic recovery.
  
• The greenback also suffered after both Goldman Sachs and Citigroup reported better-than-expected earnings in the third quarter.
  
• Goldman Sachs posted a net income of $5.25 a share, compared with the average estimate of $4.18 a share, and profits for the period were $3.19bn, a four-fold increase from the same period in 2008.
  
• In trading this morning the euro has slipped back slightly but the price remains at near 14-month highs, hovering just above 1.49.

Broad dollar weakness and an increase in demand for sterling has pushed the price back near $1.63

Sterling achieved a three-week high of 1.6297 against the dollar yesterday, supported by upbeat comments about the UK economy.

• The pound jumped nearly three cents, or 1.8%, against the dollar on speculation that policy makers will pause their asset-purchase programme next month as the economy shows signs of recovering from the recession.
  
• The Financial Times cited Bank of England Markets Director Paul Fisher as saying that the asset purchases scheme may be paused to give the central bank the option “of doing more later.”
  
• Analysts suggested that it appeared that the Bank of England was letting it be known in more forceful terms that it is not talking the pound down any longer.
  
• Additionally, the pound benefited from broad dollar weakness as optimism about the global economy and buoyant earnings from Goldman Sachs and Citigroup encouraged investors to move into currencies seen as being higher risk.
  
• Data also revealed that US jobless claims dropped by another 10K week-on-week, and that the inflation figure increased to 0.2%, both of which beat market expectations, lessening demand for the haven currency.

Sterling has rallied strongly against the euro, pushing up over 1.09

Sterling strengthened as much as 2.2% to a ten-day high of 1.0936 against the euro yesterday, its biggest intra-day gain since Jan 30th.

• Sterling was able to post strong gains following bullish comments from a Bank of England policymaker who stated that quantitative easing is in fact working.
  
• MPC member Paul Fisher told the Financial Times he felt confident that the bank’s asset purchase programme was ‘having the scale and speed of impact that we would have hoped for when we started,’ back in March.
  
• Analysts said that the comments were perceived as lessening the chances that the central bank would expand its loose monetary policy at their next meeting in November, which to some extent, had already been priced into the market.
  
• His comments echoed those made by fellow MPC member, and deputy Bank governor, Charles Bean, who said on Tuesday that as the recovery proceeds, the Bank would need gradually to remove the large monetary stimulus or risk overshooting its 2 per cent inflation target.
  
• Sentiment towards the pound has remained buoyant in trading this morning, with the pound currently consolidating its positions above 1.09.

Sterling has picked itself up from multi-year lows against the kiwi, buoyed by improving economic sentiment

The pound was able to reverse a four day slide against the kiwi yesterday, following positive data in the UK labour market.

• Figures showed that fewer than expected Britons claimed for unemployment benefit month-on-month in September, and the overall unemployment rate held steady at 7.9%, beating market expectations of a rise to 8.0%.
  
• The kiwi also suffered after some investors turned bearish following weak US retail sales, which fell in September by the largest amount in 2009, driven by a fall in car sales at the end of the country's scrappage scheme.
  
• The pound was able to reach up over 2.17, but in a market that remains broadly bearish towards the pound, the kiwi trimmed its losses, with the price closing at 2.1600.
  
• The New Zealand dollar has climbed again this morning, supported as stronger-than-forecast inflation data raised the prospect of an interest rate rise sooner than expected.

Aussie edged higher vs the pound again yesterday, but sterling has rebounded following upbeat comments from a BoE policymaker

The aussie edged higher yesterday as continued strong demand for the high-yielding currency offset positive employment data in the UK.

• The UK currency found early support following better-than-expected employment data that revealed the rate of people claiming benefit allowance was declining.
  
• However, the news was unable to buoy a broadly weaker pound, with investors continuing to be attracted by the recent rate rise and general positive sentiment surrounding the Australian economy.
  
• The aussie also took advantage of rallying equity markets, which took their lead from better-than-expected quarterly earnings at JP Morgan reinforcing the notion that economic conditions are improving.
  
• In the early hours of this morning, the Reserve Bank of Australia chief made a hawkish speech that has provided a boost to high-yielding currencies. The broad dollar sell off that has ensued has prevented the pound from sliding further against the aussie, with the price currently hovering below 1.75.
  
• Sterling has also received a boost this morning in the wake of positive words from BoE policymaker Paul Fisher who said that he felt confident that QE was working

The single currency continues to strengthen against the dollar, posting a fresh 14-month high

The dollar slid further against the euro yesterday as solid results from JP Morgan Chase and rising equities stoked optimism about an improving global economy.

• The euro extended its rally, hitting a fourteen-month high of 1.4943 against the greenback, boosted after data showed an acceleration in eurozone industrial output.
  
• Industrial production in eurozone rose for the fourth straight month in August, providing further evidence that the area's economy is on track to post its first rise in gross domestic product in the third quarter since the first quarter of 2008.
  
• Pressure on the dollar was also added as every major stock market in Europe rose after New York-based bank JP Morgan Chase announced strong third-quarter earnings, adding to risk appetite.
  
• The dollar found little support against a broadly stronger single currency after data revealed that US retail sales fell by 1.5% in September, although they did top estimates of a drop of 2.0%.
  
• The euro has continued to push higher this morning after the FOMC minutes confirmed that interest rates in the US would remain at record lows for some time.

Sterling is making strong headway against a weakened dollar, advancing towards 1.62

Sterling made strong gains in early trading yesterday following better-than-expected employment data, but the price pulled back to close up 0.4% at $1.5980.

• The number of UK jobless claiming unemployment benefit rose by 20.8K in September, less than the forecast figure of 25.1K, and the smallest rise since May 2008, enabling the pound to post an intra-week high of $1.6022.
  
• The greenback also suffered from comments made on Tuesday evening from Fed Vice Chairman Donald Kohn, which supported speculation that the dollar downtrend will be broad and continuous for some time to come.
  
• However, the dollar trimmed its losses in the afternoon following a drop in sales figures. Due largely to the end of the cash-for-clunkers programme, retail figures in the US fell by 1.5% in August, having risen by a revised 2.2% in August.
  
• The dollar has come under heavy pressure in trading this morning after the Federal Open Market Committee minutes, released late last night, confirmed speculation that US interest rates would be kept at near zero for an extended period.
  
• Sterling has gained over a cent, or 0.8%, so far today, with the price currently hovering just above 1.61.

Bearish sentiment towards the pound prevailed yesterday, but the sterling is rallying strongly against the euro today

The pound relinquished early gains against the single currency, closing marginally down at 1.0704 as rising risk appetite benefited the euro.

• Sterling initially rose against the single currency yesterday after data showed a smaller than expected rise in the number of UK jobless claiming benefits, and the overall unemployment rate unexpectedly held at 7.9%.
  
• This data prompted investors to further pare back some of the heavy bets built up against sterling in recent weeks, which have pushed the price to multi-month lows.
  
• In addition, some analysts have said that speculation over an extension of quantitative easing could be overdone, and that the pound / euro price could have correction potential.
  
• However, the market remained broadly bearish on sterling because of Britain’s deteriorating fiscal position and the likelihood that rates will remain at 0.5% for a long period.
  
• In afternoon trading, the euro clawed back its losses, supported by a significant rise in global equities, which buoyed demand for the broadly stronger single currency.
  
• The pound has reversed its down trend this morning, benefiting from the word so of a BoE policymaker who said that quantitative easing was now working.

The kiwi dollar continues to climb as expectations of a rate rise strenghten

Once again sterling edged downward against the kiwi yesterday, though it picked itself up significantly from an intra-day low below 2.13, to close at 2.1534.

• The pound dropped in early trading after a business group said the Bank of England should expand its asset-purchase programme and the inflation rate slowed more than forecast.
  
• UK annual consumer price inflation slumped to its weakest rate in seven years in September, underlining the likelihood that the Bank of England will need to maintain loose policy for an extended period.
  
• However, investors took the opportunity to cash in profits in the afternoon, buying back into the pound, enabling the sterling price to rally.
  
• In trading this morning, the kiwi has resumed its climb, with figures pointing to a continued recovery in the NZ housing market, which bolstered expectations of rate rises early next year.

The aussie stumbled yesterday, enabling the pound to gain as investors took profits

The pound reversed a three-day slide against the aussie, posting gains of nearly a cent as investors took an opportunity to lock in profits.

• During the morning session, the pound continued to push multi-year lows, hitting a price of 1.7333, as weak inflation data reinforced concerns over the strength of the UK economic recovery.
  
• UK consumer prices fell to a five-year low of 1.1% in September, dipping below the market’s estimate of 1.3%, due in part to lower utility bills and food prices.
  
• In addition, demand for the aussie remained strong as traders continued to favour gold over the US dollar, pushing the price to an all-time high.
  
• However, the pound made a comeback in later trading, rallying nearly two cents off record lows, as investors booked in profits.
  
• The pound was also supported by some upbeat comments from the BoE Deputy Governor, who stated that earlier fears of UK recovery were unfounded.

The single currency is pushing up towards 1.49 against the dollar as risk appetite firms

The single currency reached a 14-month high of 1.4874 against the greenback yesterday, advancing over a cent, as investors refocused on the outlook for US interest rates.

• In early trading, the single currency suffered a setback as the German ZEW Economic Sentiment index dropped to 56.0 from 57.7 in September, its first fall in three months.
  
• However, the dip provided a good buying opportunity for a market that remains broadly bearish on the dollar, allowing the euro to push higher.
  
• Analysts also noted that the weakness of the dollar was due in part to comments from a Japanese Ministry of Finance official, which reiterated the recent stance to accept the onging strength of the yen.
  
• In addition, the dollar was trading lower on the back of a surge in commodities, with gold rising to post an all time high of $1,065/oz, extending its rally from $984/oz on October 2nd .
  
• The single currency has continued to advance this morning, briefly posting as high as 1.49, though trading today could be light ahead of the FOMC minutes released today at 19:00BST.

The pound/US dollar price is slowly rising as investors broadly sell the greenback

Having made early losses, the pound recovered ground in afternoon trading following positive comments from the BoE Deputy Governor, Charles Bean.

• The pound initially fell against the dollar after consumer prices last month rose 1.1%, down from 1.6% in August according to the Office for National Statistics, which was below the 1.3% prediction.
  
• Prime Minister Gordon Brown also said that government had to ensure that the recovery is not going to be derailed, suggesting that stimulus measures would not be removed anytime soon.
  
• However, in the afternoon, the pound rebounded strongly, following the words of Deputy Governor Bean who stated in a speech that the British economy has hit rock bottom and the worst fears of earlier in the year are unfounded.
  
• In addition there was a substantial return to dollar selling in the market, spurred by persistent expectations for low US interest rates, and investor appetite for high-yielding currencies.
  
• Sterling has continued to edge upwards in trading this morning, though unemployment data, which is released at 09:30BST and is forecast to reveal a higher claimant count, could hamper demand.

Sterling picked up from early lows to post marginal gains against the euro yesterday

The pound reversed its three-day slide against the euro as a surprise dip in a German economic sentiment index offset weak UK inflation data.

• In early trading, sterling was undermined by a declining inflation rate, which prompted further speculation that interest rates could be on hold at 0.5% until 2011 and sent the UK currency to a six-month low of 1.0628.
  
• The Consumer Prices Index (CPI) dropped to an annual rate of 1.1% in September from 1.6% in August. Meanwhile, the Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments and housing costs, fell, to -1.4% from -1.3%.
  
• However, the pound rebounded strongly after the “positive signs” in the eurozone began to fade, with the German ZEW measure of investor sentiment unexpectedly falling after three months of gains.
  
• Additionally, the pound was given slight support in the afternoon after the BoE Deputy Governor spoke more positively about the UK recovery, subduing rising concerns over the health of the economy.
  
• Investors took the opportunity to lock in profits, allowing the pound to rally up from session lows to close up at 1.0718.

The kiwi continues to climb vs sterling following strong retail sales data in NZ

The pound edged lower against the kiwi dollar yesterday as investors continued to shift their funds into high-yielding currencies, with the pair closing at 2.1542.

• Commodity and equity markets rallied higher yesterday, including a rise of nearly a percent in the Nikkei 225 and the Shanghai Composite, which maintained strong demand for the kiwi.
  
• Selling pressure on the pound also remained high following a report that cast doubts over the pace of the UK economic recovery, stating that interest rate rises would lag those of other major economies.
  
• In trading this morning, the pound has shed a further two cents against the kiwi following a surprise jump in New Zealand retail sales for August.
  
• Sales rose 1.1% from the previous month, beating expectations of a rise of 0.6% and fuelling talk that the central bank might soon drop its economic easing measures.

Strong commodity prices and doubts over the UK economy allow the aussie to gain further ground

The Australian dollar continued to push higher yesterday, advancing over a cent as sentiment towards the higher-yielding currency remained positive.

• Commodity currencies, such as the aussie, made progress yesterday in line with stronger prices for oil and metals.
  
• Rallying global equity and commodity markets encouraged the rise in risk appetite in the market, which heightened demand for the aussie dollar.
  
• In the UK, the market still holds the view that further quantitative easing could be announced in November, which has put substantial pressure on the UK currency as other major economies look to wind up stimulus measures.
  
• In trading this morning, the pound has halted its steep decline, with the price currently flat as a weaker-than-expected business confidence survey stemmed demand for aussie assets.

Euro posts gains against the US dollar as risk appetite ushers investors into high-yielding currencies

The single currency recovered some of the losses it incurred on Friday, gaining over half a cent against the greenback as risk appetite in the market strengthened.

• Rallying equities yesterday, which have been boosted by stronger commodity prices and optimism about the US corporate earnings season, also buoyed support for the euro, allowing it to briefly trade over 1.48.
  
• Analysts also noted that while in other nations future policy remains hazy, the single currency benefited from a clearer outlook for monetary policy in the eurozone.
  
• Additionally, comments from the president of the St Louis Federal Reserve that the US economy faced risks from rising inflation, stoked speculation that US interest rates might rise sooner than had been expected, but investors remained bold in their exposure to risk, continuing to sell the dollar.
  
• This morning, the pairing is trading relatively steadily around yesterday’s closing price, although the euro is likely to find support from a German economic sentiment survey, released today at 10:00BST.
  
• In the US, investors await figures on the Federal Budget Balance, however the exact time of the release is unknown.

Sterling loses further ground to the dollar on specualtion of a further extension of QE

Traders continued to sell sterling yesterday, pushing the UK currency down to a five-month low against the dollar, eventually closing at 1.5797.

• The pound lost ground after an economics and business report forecast that sterling could fall as low as $1.40 against the dollar.
  
• The report found that interest rates in the UK were likely to remain at record lows for some time and would remain at just 2.0% until 2014, which would put the country’s yield well behind other major economies.
  
• Traders also continued to speculate that the Bank of England might increase the value of its quantitative easing policy beyond the current £175bn, in stark contrast to the prospect of similar special stimulus measures being wound down in other economies.
  
• In trading this morning sterling has edged lower, as investors await details of the UK’s inflation rate, which is predicted to fall to 1.3%. Should the rate fall below 1.0%, the governor of the BoE, Mervyn King, must write a letter explaining the fall, though the time of this release is undisclosed.

Sterling slides further in the wake of a damning UK economic report

The pound maintained its downward trend yesterday, losing a further 0.6% as a British report cast doubts over UK recovery prospects.

• The outlook for global monetary policy shaped action on the foreign exchange markets on Monday, with sterling the main casualty.
  
• A report from the Centre for Economics and Business Research predicted that UK interest rates would remain at their historic low of 0.5% through 2010. The report also forecast they would stay below 2% until 2014.
  
• That would be likely to leave sterling the lowest-yielding major currency at a time when interest rates outside the UK look set to start rising, which added selling pressure to the fragile pound.
  
• In trading this morning, the UK currency has continued to lose ground, with a positive housing price survey failing to buoy demand.
  
• Sterling may find some support today should the Consumer Price Index reveal a slightly higher inflation rate at 09:30BST. Gains may be short lived however, with forecasts predicting an upbeat German economic sentiment survey, figures of which are released at 10:00BST.

Demand for the kiwi remained strong yesterday, but it has lost ground in the wake of comments from Ben Bernanke

The pound edged down against the kiwi as rising risk appetite in the market offset the BoE’s decision to hold their monetary policy unchanged.

• Investors continued to buy into the higher-yielding New Zealand dollar, encouraged by rallying global equity markets and a broadly weaker dollar.
  
• In the UK, the BoE kept interest rates at 0.5% and decided against extending the quantitative easing programme as some had feared.
  
• However, the decision only gave the pound a muted boost against the kiwi, as investors had already priced the news into the market.
  
• In trading this morning, the kiwi has trimmed its gains as investors lock in some profits and as comments from the Fed Chairman suggested that the US may need to tighten monetary policy, spurring a slight return to the US dollar.
  
• However analysts have noted that overall market sentiment towards the kiwi is still pretty bullish, and that any upward movement for the pound is likely to be as a result of profit taking, rather than decreasing demand for kiwi assets.

The aussie continues to trade strongly, supported by risk appetite in the market

The aussie climbed a further two cents yesterday as figures revealed rising employment in Australia, and as rising risk appetite supported strong demand for high yielding currencies.

• The Australian dollar continued to push higher as encouraging data from the labour market gave investors further cause to buy into Australian assets.
  
• The recent rate hike to 3.25% has increased the yield gap between the two currencies, and the recent downturn in unemployment has simply reinforced the sentiment that Australia is at the forefront of the global economic recovery, strengthening aussie demand.
  
• Additionally, gold prices pushed record highs for the third straight day yesterday, which supported demand for the commodity driven aussie dollar.
  
• The pound has slipped below the 1.77 mark in trading this morning, though its rate of decline has slowed following comments from Ben Bernanke
  
• The Fed Chairman spoke of the possibility of tightening the US monetary policy which has led some investors to trim their long positions in the aussie dollar.

Euro advanced against the greenback, buoyed by a relatively upbeat ECB rate statement

The single currency climbed to a two week high of 1.4815 yesterday as investors continued to sell the dollar to fund riskier trades.

• The single currency returned to its recent upward trend, initially climbing half a percent, as investors took up dollar selling in the wake of further evidence of global economic recovery.
  
• Australian employment data revealed a rise in jobs in September, reinforcing risk appetite and triggering broad dollar selling as its haven appeal weakened.
  
• The single currency held its gains in the afternoon after the European Central Bank left interest rates unchanged at a record low 1.0%, as the market expected.
  
• In his following statement, the ECB President, Jean-Claude Trichet told reporters that “the euro-area economy is stabilizing and is expected to recover at a gradual pace.”
  
• Additionally, Trichet was not as forceful about the need for a strong dollar as many had expected him to be, allowing the single currency to close up at 1.4793.
  
• The single currency has trimmed its position in trading this morning, after Ben Bernanke indicated that US monetary policy may have to be tightened as a recovery takes hold.

Pound advanced vs a weakened dollar yesterday, supported too by a hold in the UK's QE programme

The pound climbed just over a cent (0.6%) against the dollar, buoyed by the BoE’s decision to keep its assets purchase scheme on hold.

• In early trading sterling moved up against a broadly weak dollar, supported by expectations that the BoE would keep interest rates unchanged and maintain its current level of quantitative easing.
  
• The dollar also came under pressure, falling broadly as rising equity markets fuelled demand for riskier assets at the expense of the safe haven US currency.
  
• Dollar selling was led by positive employment data in Australia, which spurred investors to relinquish positions in the greenback in favour of higher-yield currencies, favouring an upward movement in the sterling/dollar pair.
  
• At midday, the BoE announced no change to their current monetary policy, which allowed the pound to advance further, reaching a ten day high of 1.6117.
  
• However, sterling did cap its gains as Mervyn King left the door open for further quantitative easing in the future.

The sterling/euro price closed relatively unchanged yesterday as both the MPC and ECB held rates.

Sterling was unable to build on Wednesday’s gains, as trading between the pair held steady following a relatively muted market response from the two interest rate statements.

• Yesterday morning, the pair remained tightly range bound as investors held back from taking positions ahead of the rate statements from the two central banks.
  
• Analysts noted that people had taken sterling a lot lower recently and maybe now they were beginning to think that the BoE would not extend quantitative easing
  
• At midday it was revealed that the BoE did decide to hold both the interest rate and the asset purchase scheme at their current levels.
  
• However, sterling was unable to build on an intra-day high of 1.0916, as ECB President Trichet avoided seeming too dovish over the eurozone’s recovery.
  
• Trichet did speak of the need to be “prudent and cautious” over the coming months, but he acknowledged that the eurozone economy was stabilising, recovering at a gradual pace, which enabled the single currency to rebound in the afternoon.

Kiwi halted its climb yesterday, as demand for higher-yeilding currencies weakened

Sterling reversed a three-day decline against the kiwi, posting marginal gains following a rise in risk aversion, closing the day at 2.1682.

• It was a choppy session for sterling, which initially dropped to a low of 2.1476 in early trading, as a lack of major economic data gave support to the higher-yielding currency.
  
• However, having dipped, the pound rebounded strongly, regaining over two cents as global equities backed off to trade in the red.
  
• Weak European stocks were followed in by the US markets, easing risk appetite and allowing the UK currency to stabilize in the afternoon, consolidating its position above 2.1650.
  
• In the early hours of this morning, the pound relinquished its gains as the kiwi found support from strong employment data from its neighbour Australia, and as higher Asian equities reaffirmed demand for the New Zealand dollar.
  
• However, the pound has found broad support as the European markets open, with the price currently hovering just below 2.17.

Weak equities undermined the aussie's upward trend yesterday allowing the pound to post marginal gains

The pound rebounded nearly two cents from its intra-day low against the aussie, halting its sharp slide and posting marginal gains of 0.2%, to close the day up at 1.7912.

• The Australian dollar has rallied strongly over the past two days following the surprise rate hike, but the aussie pulled backed yesterday as risk sentiment in the market dissipated.
  
• The high-yielding currency backtracked as equities took a downward turn and as investors sought defensive positions ahead of important statements in the UK and EU today.
  
• Additionally, analysts noted that market players may have over-bought the aussie, realising that it was only one central bank to raise rates and that similar moves from other nations may still be some way off.
  
• In trading today however, the Australian dollar’s upward trend has continued, already up 0.8% on the day, as strong employment data reinforced the pace of recovery in the nation.
  
• Overall unemployment fell to 5.7% in September, an improvement from 5.8% the previous month and beating out market expectations of 6.0%.

Investors were cautious yesterday ahead of an ECB rate decision, but the euro has rebounded this morning

The euro relinquished some of its recent gains against the greenback yesterday, with investors on the defensive ahead of the ECB rate decision today.

• A broadly stronger dollar was the currency of choice yesterday as investors trimmed “riskier” positions in favour of the haven currency as equities slipped into the red, easing risk appetite.
  
• The dollar also benefited after a US official said raising interest rates would not derail the US economic recovery. “Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy.
  
• Additionally analysts noted that the greenback was being supported by speculation that the dollar’s decline may have been too fast to sustain.
  
• In trading this morning, the greenback has come under pressure after Australian employment data reinforced demand for higher-yielding assets.
  
• The ECB are widely expected to announce today at 12:45BST that interest rates in the eurozone will remain at a record low of 1.0%, though the tone of the accompanying statement is likely to reflect growing optimism over the state of economic recovery in the region.

Sterling edged up against a broadly weaker dollar ahead of important central bank announcements

The pound reversed its steady decline against the greenback yesterday as investors relinquished defensive positions ahead of today’s MPC announcement.

• Cautious investors initially sought safety ahead of the two key central bank meetings today, putting pressure on the UK currency.
  
• Additionally, in an interview, Kansas City Federal Reserve President Thomas Hoenig said that the US central bank should start raising interest rates “sooner rather than later,” which buoyed confidence in the US economy.
  
• However, the greenback’s gains were limited, with the pound rebounding a cent from its intra-day low as investors felt that the market had gone too short on sterling positions ahead of today’s statements.
  
• In trading this morning, the dollar has been broadly sold as employment data in Australia beat expectations for a fall in jobs in September, with the rate actually falling to 5.7%.
  
• The pound has advanced nearly a cent, consolidating its positions above 1.60, although trading may be volatile following the MPC rate decision, announced at 12:00BST today.

Sterling posted gains vs the single currency, with the market forecasting no change in MPC policy

Having hit a fresh six-month low against the single currency in early trading , the pound rebounded yesterday, to close up half a cent at 1.0864.

• Unexpectedly weak data in the UK manufacturing industry on Tuesday continued to weigh heavily on the pound, dragging sterling to a 6-month low of 1.0781.
  
• With little data out in either the UK, the eurozone, or the US yesterday, markets initially continued to take direction from Tuesday’s data, which supported sterling selling.
  
• The euro trimmed its gains though following the second quarter final GDP figure for the eurozone, which was revised downward from a contraction of 0.1% to 0.2%, dampening the broadly positive sentiment towards the currency.
  
• In trading today investors will be listening carefully to both the MPC and ECB’s respective rate statements for clues to future rate movements.
  
• Both central banks are expected to keep interest rates at record lows, however analysts have noted that the BoE, in light of recent economic data, may hint at extending their asset purchase scheme before the year’s end, which could greatly weaken the UK currency.

Kiwi found support from the strength of its neighbour yesterday, and as global equities rallied strongly

The pound lost a further one and a half cents to the kiwi following negative UK data, and as the aussie rate hike put the focus on the next RBNZ rate decision.

• Fears that Britain's fragile economic recovery is faltering were sparked after official figures revealed a surprise fall in industrial output in August.
  
• The data showed a 1.9% drop in manufacturing output month on month, a full 2.5% below the market prediction, encouraging further pound selling.
  
• The kiwi also benefited indirectly from the 25 basis point rate rise in Australia, which supported demand for higher-yielding currencies.
  
• The pound is now trading at record 20-year lows against the New Zealand dollar, as investors price a similar move from the New Zealand central bank into the market.
  
• The New Zealand dollar is up a further 0.3% this morning, as stronger global equities, higher dairy prices, and a weak US dollar helped to maintain support for risk trades.

Rate rise to 3.25% in Australia boosts demand for the aussie

The Australian dollar continued to push record highs yesterday, supported by the RBA’s decision to raise rates as the global financial crisis eases.

• The aussie continued to rally strongly, gaining nearly three cents, a 1.4% movement, as investors sought to take advantage of the higher-yield now available on Australian assets.
  
• The Reserve Bank of Australia became the first of the G20 nations to raise their base cash rate and helped to ease fears over the state of global economic recovery.
  
• Analysts also noted that the widening yield advantage points to further aussie appreciation, particularly as the RBA, unlike other central banks, does not seem too concerned about their currency strength.
  
• Additionally, the pound was further undermined yesterday as a negative manufacturing figure resurrected fears over Britain’s third quarter growth rate, pushing the price lower.
  
• The aussie dollar continues to trade strongly in trading this morning, encouraged by rallying Asian equities, pushing the price down near 1.77.

Single currency pushed higher vs the dollar, which came under heavy selling pressure

The single currency made strong gains yesterday as the dollar came under pressure about its future status as the chief currency used in oil trades.

• The single currency broached two week highs as a report came through that Arab States were in secret discussion to find alternatives to using the dollar in oil trades.
  
• Major oil-producing countries have denied the report, but markets reacted strongly to the news, which has added fuel to arguments that the US currency’s global status is coming under pressure.
  
• Analysts noted that the dollar’s sharp fall was a good example of poor sentiment toward the US currency being vulnerable to speculative selling.
  
• Rallying equity markets encouraged further dollar selling, with risk appetite in the market diminishing the appeal of the haven currency.
  
• Risk was also high following the Reserve Bank of Australia’s relatively unexpected rate hike, which spurred demand for high-yielding assets, lending support to an upward movement in the euro/dollar price.

Negative UK economic data pushes the pound down against a broadly weakened dollar

Sterling was unable to capitalize on an early rally against the dollar as weak economic data reaffirmed fears over the fragility of the UK recovery.

• Sterling initially advanced over a cent yesterday morning as selling pressure on the US currency mounted following an article stating that the dollar could cease to be used in oil trades in the Gulf States.
  
• However the pound relinquished its gains after weak manufacturing production data sapped investor demand for the UK currency.
  
• The manufacturing sector revealed a 1.9% decrease in production in August, reversing a three month increase in output, and falling well below expectations of a 0.4% rise.
  
• Economists, who had been hoping for a resumption of growth in the third quarter, warned that the figures could damage Britain's recovery prospects.
  
• Although sterling completed its fourth straight day of declines, it has only slipped 0.4% in that time, with investors increasingly selling the dollar to buy higher-yielding currencies.
  
• The pound has continued to edge steadily downward in trading this morning, as risk appetite in the market continues to bypass the burdened UK currency.

No reprieve yet for the ailing pound; continues to slide further against the euro

The pound slid for the third consecutive day against the single currency, losing 0.6% following a fall in industrial output, to close at 1.0812.

• Sterling received an early boost yesterday morning as a Halifax survey revealed a further rise in UK house prices of 1.6% in September, buoying hopes of a strengthening economy.
  
• However, such hopes were soon dashed after data revealed an unexpected fall in UK manufacturing output, which raised doubts over recovery prospects.
  
• British manufacturing fell 1.9% on the month in August, its steepest fall since January, which compares to a downwardly revised rise of 0.7% in July, and fell some way short of analysts’ predictions of a 0.4% increase.
  
• Importantly the data has also raised concerns that the UK may not have shown positive growth figures in the third quarter. The British economy is predicted to have exited recession, though yesterday’s figures could have dampened these expectations.
  
• Investors have continued to sell the pound in trading this morning, with downward pressure likely to remain strong ahead of tomorrow’s rate statement.

The kiwi dollar has risen sharply following a positive business survey and the RBA rate increase

The kiwi dollar posted a 2.1% gain, a movement of four and half cents, against the pound yesterday in the wake of a strong business confidence survey.

• During European trading hours the kiwi gained steadily, supported by speculation that Australia would raise their interest rate level.
  
• The kiwi was also buoyed by rising risk appetite as global stocks held up despite a weak US employment report on Friday.
  
• In late evening though, the kiwi received a solid boost after the respected NZIER survey revealed the first optimistic figure since the fourth quarter of 2006, triggering investor demand for the New Zealand currency.
  
• In trading this morning the kiwi has continued to gain following the decision of the RBA to move their interest rates up to 3.25%, with the sterling/NZD price nearing a 20-year low.
  
• However, the kiwi has trimmed its gains, currently trading just 0.1% up on the day, as New Zealand officials highlight the difference between their economy and their neighbour’s.

A rise in aussie interest rates broadly strengthens the Australian currency

Speculation over an imminent rate rise in Australia sent the pound tumbling yesterday, losing 1.5% to close at 1.8146.

• The Australian dollar advanced strongly as expectations grew that the Reserve Bank of Australia would move to raise interest rates at its policy meeting.
  
• Forecasters were split evenly over whether the Reserve Bank of Australia would keep rates on hold in their meeting tomorrow or wait until November or December to raise rates by 0.25 basis points.
  
• Expectations were given a further lift as figures yesterday showed that Australian job advertisements last month rose at their fastest pace since late 2007, fuelling optimism over the country’s recovery.
  
• This morning, the bullish speculators were proved correct as the Reserve Bank did indeed raise the official cash rate from a 49-year low to 3.25%, up 25 basis points.
  
• The move makes Australia the first G20 nation to raise their rates following a prolonged period of positive economic activity, and the pair are currently hovering marginally above 1.80.

The euro has made strong gains against the dollar, buoyed by a rise in risk and pressure on the US currency

The euro posted solid gains against the greenback yesterday, as positive US data buoyed demand for the ‘riskier’ single currency.

• The dollar remained weaker against the euro in trading, continuing its decline after last week's weaker-than-expected US data failed to extinguish risk appetite
  
• The dollar was also lower as traders read the absence of any new commitment on currencies from the G7 meeting over the weekend as a green light to sell the US currency.
  
• Traders were bracing for stronger language to arrest the slump in the US currency but no mention of dollar weakness was made, allowing the greenback’s downward trend to continue.
  
• The single currency also found support following a better-than-expected US Non-manufacturing PMI figure for September, which allayed concerns over the health of the US recovery.
  
• In trading this morning the dollar has fallen sharply after a British newspaper said that Gulf Arab states were in secret talks to end the use of dollars in oil trading. Currently the pair are trading back over 1.47, the highest price in nearly a fortnight.

Stong servies data and rallying equities were unable to buoy a weak pound yesterday, enabling the dollar to creep up

The pound continued to edge downward, undermined by speculation ahead of the MPC meeting later this week.

• Data revealed that Britain’s services sector grew more strongly than expected in September, expanding at its fastest rate for two years, quelling fears over the UK recovery following weak PMI data in the manufacturing and construction industries last week.
  
• However, the data failed to buoy confidence in the pound significantly with investors remaining wary of taking positions in UK assets ahead of the MPC statement this week.
  
• Additionally, business activity in the US non-manufacturing sector expanded in September, against market expectations of standstill, which supported dollar buying.
  
• The equity markets also rallied from lows at the end of last week, as confidence returned to the markets, however this was of little benefit to a burdened pound, with the pair closing relatively unchanged at 1.5934.
  
• The US currency has come under pressure this morning however, following speculation that the dollar may be dropped as the currency used in oil trades in the Gulf States, allowing the pound to make hesitant gains.

Selling pressure held firm on the pound yesterday, with the euro price falling below €1.08

The pound was unable to capitalise on improved services data, eventually losing over half a cent to a broadly stronger euro.

• The pound initially found some respite as positive data from the services sector bolstered expectations that the economy resumed growth in the third quarter.
  
• The purchasing managers’ index for the services sector showed a rise to 55.3 in September, showing improvement from last month and exceeding market expectations.
  
• However, sterling quickly relinquished its gains over expectations that the MPC meeting later this week will reaffirm that the UK monetary policy will remain comparatively loose for some time.
  
• Rallying global equity markets also benefitted euro strength, with the corresponding rise in risk appetite failing to buoy demand for the fragile UK currency.
  
• Pressure is likely to remain high on the pound today if data released at 09:30BST follows market expectations, and shows a month-on-month fall in UK manufacturing production.

A strong kiwi dollar shrugged off weak data from the US to post gains against sterling on Friday

Sterling relinquished gains against the kiwi dollar on Friday, as concerns mounted over the strength of the global recovery, with the price closing the week at 2.2269.

• Following the release of worse-than-expected jobs data in the US, risk adverse investors bought into dollar and yen havens on Friday, weakening the higher-yielding, ‘risky’ assets.
  
• However, the kiwi rebounded strongly in afternoon trading, as investors turned bearish in their sentiment towards the US recovery.
  
• The weak employment data added to concerns that the US recovery is struggling to take hold, and, after an initially flurry of dollar buying, many investors opted against the relative ‘safety’ of US assets.
  
• In trading this morning, the price has dropped back below 2.22 as the New Zealand currency tracked the strength of its aussie counterpart.
  
• Heightened speculation of an imminent rate rise in Australia has supported higher-yielding currencies this morning, and the kiwi could find further support as investors await expectations of improved New Zealand business confidence in a survey released today at 22:00BST.

Pound made gains against the aussie on Friday following weak US data

The pound advanced a further cent against the aussie on Friday, building on strong gains, as investors remained cautious following weak US employment figures.

• The US economy suffered 263,000 job cuts in September, which was far more than had been expected according to official data, sapping demand for ‘riskier’ assets.
  
• The pound advanced to over 1.84 as investors sold off the risky currency amid concerns that the US recovery may not be as robust as initially thought.
  
• However, the pound did cap its gains, as the US data dragged down European equities, with the FTSE falling below 5000 points, which dampened confidence in the UK currency.
  
• This morning, the Australian dollar as advanced strongly, up nearly a percent, as speculation mounts that the country’s central bank could raise rates later this week.
  
• Investors had been pricing in a possible rate move in early November, but the probability of a move toward 3.25 is now possible as early as tomorrow’s meeting, following comments from two Australian media columnists.

The euro posted gains against the US dollar on Friday and has reached back over 1.46 this morning

The single currency shrugged off worse-than-expected US non-farm payrolls data to post gains, closing up 0.2% at 1.4574.

• Date revealed that the US economy lost 263,000 jobs in September, which was more than had been expected, according to official non-farm payrolls figures.
  
• The Labor Department revealed that US unemployment rate rose to 9.8%, fueling fears that the labour market could undermine economic recovery.
  
• The euro initially dropped sharply to a three-week low of 1.4485 on the release of the U.S. payrolls report, as investors were encouraged to the relative safety of the greenback.
  
• However, dollar gains were modest, and the single currency was able to rebound strongly, climbing near $1.46, as analysts suggested caution in buying the US currency amid signs that the recovery could stall.
  
• Analysts noted that trading is often volatile following the highly anticipated US monthly jobs data.
  
• The dollar has fallen against the euro today, losing 0.3%, after the G7 finance chiefs refrained from calling for measures to stop the U.S. currency’s decline.