Bernanke for second term appointment

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

Sterling continues to sink lower vs kiwi dollar

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

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

Sterling plummets to 13-year low vs aussie dollar

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

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

USD claws back losses vs euro

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

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

Light data day causes pound to weaken vs. USD

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

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

Pound falls to 11-week low vs. euro

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

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