Sterling loses 2.6% vs kiwi in a week

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

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

Sterling slows its slide vs the aussie

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

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

Euro pars recent losses vs the dollar

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

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

Pound continues to tumble against the dollar

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

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

Sterling hits 11-week low of 1.1386 vs euro

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

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