Kiwi gained further yesterday but has relinquished some of its gains in trading this morning

The kiwi gained another 1.2% in trading yesterday, closing at 2.3101, buoyed by consumer confidence and strong Asian stocks.

• The kiwi extended to a twelve and half year high against the pound yesterday, as risk was supported by a higher-than-expected industrial production figure in the US.
  
• One analyst said that in an environment of growing economic confidence, there was little on the horizon to shake the kiwi’s strength.
  
• However in trading this morning, sterling has reversed its downward spiral, currently trading around 0.2% higher.
  
• Data from New Zealand late last night revealed a decline in their Business NZ Manufacturing Index which has dampened demand for the currency, enabling the pound to make a slight recovery.

High commodity prices and risk appetite keep the aussie strong against the pound

The aussie continued to post decade long highs against the pound yesterday, as risk appetite in the market strengthened.

• Increasing optimism over the prospects for global growth boosted commodity-linked currencies, enabling the aussie to gain a further 1.1% against the pound, as well as achieving a 12-month high against the dollar .
  
• Indices in Hong Kong, Korea, and Taiwan all ended on Tuesday at their highest levels of 2009, reflecting buoyant investor sentiment in the region, with commodity-linked stocks leading the charge, and supporting demand for the Australian dollar.
  
• The aussie was also supported by further upbeat data released in the US yesterday, heightening investor confidence.
  
• The market is now pricing in a possible 50 base point rise in Australian interest rates, whilst by contrast the BoE has indicated that the economy may still be in need of further monetary help.
  
• In trading this morning the pound has capped its losses as investors await important UK retail sales figures for August, released today at 09:30BST.

The euro shows no sign of slowing its rally against the dollar, as investor confidence continues to improve

The dollar remained under pressure yesterday as an increase in America’s industrial output last month encouraged investors to sell the US currency.

• US economic data revealed that industrial output rose in August and the current-account deficit shrunk, bringing the figure under $100 billion, enabling the euro to advance further.
  
• The dollar traded at its lowest level this year as another report also showed America’s consumer prices climbed last month, encouraging investors to pursue higher-yielding currencies.
  
• Additionally, rising risk appetite, spurred by the words of Ben Bernanke, boosted global stocks, stemming haven demand and pushing the euro to a close of 1.4708.
  
• The single currency has now gained over 2.5% riding on improved investor confidence and expectations that the US rates are likely to stay rock bottom for some time.
  
• Analysts have warned that this upward trend is now extremely stretched and that the rally could soon run out of steam, with the price possibly in for a technical correction.

Continued selling pressure on a broadly weak dollar has allowed the pound to strengthen

The pound was able to stem recent losses against the greenback yesterday, as selling pressure on the US dollar increased.

• Sterling was supported yesterday morning as European markets opened up strongly following U.S. data on Tuesday that reaffirmed the world's main economy is about to return to growth.
  
• Confidence was further increased by comments from Federal Reserve chairman Ben Bernanke, who said the US recession was now "very likely over."
  
• However, the pound traded in the red for the majority of the day, unable to break through the 1.6500 resistance level, with a raft of US data in the afternoon, which included CPI figures, industrial production data, and an improved current account figure, failing to encourage demand for the UK currency.
  
• The pound did recoup losses though as the US markets came online and also opened strongly, reaffirming confidence in the global recovery, and diminishing demand for haven currency.
  
• Sterling has continued to rally this morning, currently trading up 0.2% for the day.

The pound slowed its rate of decline against the euro yesterday, as stocks continued to rally

In a choppy day’s trading, the currency pair eventually closed down at 1.1214, with strong equities helping to stem the pound’s decline.

• Yesterday, the pound initially pared its recent fall against the euro after confidence in the global economy saw European equities open strongly.
  
• However, demand for the pound soon ebbed away, as data showed that the unemployment claimant count rose by 24,400 in the UK in August, which despite being a declining figure on last month, brought the claimant rate to 5.0% of the workforce.
  
• Though the data was broadly in line with expectations, the figures were not as bad as some had feared, providing some respite for the pound.
  
• In the afternoon, as US markets came online, equities continued to rally, with the FTSE 100 reaching a 12-month high, which also prevented the pound from sliding too far.
  
• UK retail sales data is released today at 09:30BST, with forecasts predicting a slight fall, which could put added selling pressure on the pound.