Kiwi continues strong run agains the pound

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

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

Aussie gains another 2 cents vs sterling

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

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

Single currency reverses losses against greenback

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

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

Pound starting to recover losses vs dollar

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

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

Weak economic data drove pound down yesterday

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

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