The kiwi has relinquished gains made yesterday, as confidence in the pound returns

A strong rise in risk sentiment saw the pound fall further against the New Zealand dollar yesterday, to close at 2.3592, down 1.0%.

• Sterling traded around the lows it hit a couple of weeks ago as rallying equity markets eased risk aversion and spurred demand for higher-yielding currencies.
  
• Commodity driven currencies were the real winners yesterday, as investors relinquished haven positions in search of a greater yield.
  
• Confidence in the New Zealand currency also remained high as investors speculate on an upbeat statement from the RBNZ later this week, whilst speculators remained wary of a possible dovish statement from the BofE on Thursday.
  
• The recent rise for the kiwi has actually become an issue for Governor Alan Bollard, who has expressed his discomfort with its surge stating that the high rate may hamper New Zealand’s export led recovery.

The pound has reversed its downward trend against the aussie today on rising European equities

The pound fell for a fourth consecutive day against the aussie yesterday, driven by a broad rise in risk sentiment.

• The Australian dollar hit its strongest level in thirteen years against the pound yesterday as improved investor sentiment was sparked by reassurances from the G20, who pledged to continue with policies aimed at supporting the global economy following a meeting in London over the weekend.
  
• Although there was not a big market reaction to the G20 meeting, part caused by the US Labor Day holiday, the outcome was certainly pro-risk appetite, which strengthened demand for the Australian currency, driving the pound down 1.9098, a 0.9% dip.
  
• The aussie was given an additional lift by the first rise in Australian job advertisements in 16 months, which increased speculation that the Reserve Bank of Australia may raise rates before the end of the year.
  
• In trading so far this morning, the aussie has pared its gains as investor appetite towards riskier assets was tamed as Asian stocks traded in the red.

The single currency as surpassed its previous monthly high today against a broadly weaker dollar

The single currency continued to gain ground against the dollar yesterday, spurred on by a rise in European equities.

• The single currency found support against a broader weaker dollar yesterday as bullish European stocks eased risk aversion, weakening haven currencies.
  
• The single currency also made ground, as German factory orders revealed a further rise in the strength of their manufacturing industry.
  
• Data showed that factory orders rose a stronger-than-expected 3.5% in July, but the reaction was relatively subdued with the euro trading steadily up around 0.3%.
  
• In trading this morning, the euro is continuing to consolidate its gains, nearing the highs of 1.44 it achieved at the end of August.
  
• German monthly production figures are released today at 11:00BST, which are predicted to follow yesterday’s data in supporting Germany’s recovery, whilst in the US there are no major announcements.

Sterling has reversed yesterday's losses against the dollar, gaining a cent in trading this morning

On the Labor Day holiday, the pound fell back to $1.6347 against the greenback despite a general rise in risk sentiment.

• The pound initially edged up further against the dollar yesterday as risk sentiment was supported by gains in the European equity markets.
  
• The G20 ministers over the weekend pledged to maintain monetary stimulus which, although this came as no surprise, it was nonetheless supportive of risk and generated a rally in the European equity markets.
  
• Gains were short-lived, however, as speculation of further easing by the Bank of England later this week prevented the pound capitalising on the rise in risk sentiment.
  
• Analysts noted that trading was choppy yesterday due to merger and acquisition speculation after Cadbury rejected a £10.2 billion take-over bid by US conglomerate Kraft Foods.
  
• Sterling however has reversed its losses this morning, already creeping up near the 1.64 level, as investors speculate on positive British manufacturing production data released today at 09:30BST.

Expectations of further monetary easing kept the pound low agains the euro yesterday

Investors were cautious of taking sterling positions yesterday, with the pound losing 0.5% against the single currency to close at 1.1404.

• Sterling relinquished its recent gains against the euro yesterday as speculation of further easing by the Bank of England later this week overshadowed the market.
  
• Analysts have noted that policy expectations will be the main driver of sterling this week, with the majority of forecasters expecting the rate to hold steady at a record low of 0.5%.
  
• The single currency was also assisted by a stronger-than-forecast factory orders figure in Germany which reaffirmed the strength of the manufacturing sector’s recovery in the eurozone’s largest economy.
  
• In trading this morning, the pound has started to curb its losses, edging marginally lower, but holding around the 1.14 level.
  
• In the UK today, production data is being released at 09:30BST, with analysts forecasting a rise of 0.3% in July, a reduced figure from the previous month.