Kiwi suffered a severed setback following the RBNZ rate statement yesterday evening

In a poor day for the kiwi dollar, the pound rose by over seven cents, or 3.1%, against the kiwi, reaching a one-month high as traders withdrew long positions.

• A slide on Wall Street and on European share indices, led by declines in the energy and banking sectors, accelerated a sharp fall in the "riskier" kiwi dollar.
  
• This was compounded after data revealed an unexpected fall in US new home sales for September, which, as general sentiment was that the housing sector was on the mend, raised concerns in the market, sapping demand for the kiwi.
  
• The New Zealand currency was further undermined in the evening, diving two cents, after the central bank dampened expectations of an early rate rise.
  
• The RBNZ left rates on hold at 2.50% as expected and moved to a neutral bias. But it added in its statement that it expected to leave rates on hold until the second half of 2010, against expectations of a rise later this year.
  
• In trading this morning, the kiwi has pulled back slightly, though the price remains up around 2.2650.

Aussie was broadly sold yesterday as investors withdrew riskier positions

The pound advanced by 2.3% against the aussie as risk appetite stumbled in the wake of weak US economic data and a steep slide in global equities.

• In the early session, Australian inflation data was revealed to be slightly below expectations, leading investors to pare bets that the Reserve Bank of Australia will decide on a hefty interest-rate hike next week.
  
• The consumer price index rose in the third quarter by an annual 1.3%, the smallest gain since the second quarter of 1999, after advancing 1.5% in the previous three months.
  
• In addition, the price of gold continued to fall in trading yesterday, finding resistance around $1030 per ounce, which dulled demand for the commodity-driven currency.
  
• The pound was able to reach a three-week high of 1.8290 as investors shed their risky assets yesterday, and the pound could advance further if the US GDP data, released later today, disappoints market expectations.

Weak US data enabled the US dollar to continue clawing back losses against the euro

The single currency slipped further away from recent 14-month highs against the dollar yesterday, losing nearly a cent to close down at 1.4707.

• The US dollar rose, stretching a rally against the euro to a fourth day, supported by weak U.S. economic data that weighed on equity markets and led investors to seek safety in the greenback and cut exposure to assets perceived as risky.
  
• Initially though, the euro pared early losses after data showed core US durable goods orders were better-than-expected in September.
  
• The report revealed that the core figure, which excludes transport equipment, rose by 0.9%, higher than forecasts of a 0.6% rise, strengthening risk appetite in the market.
  
• However, in the afternoon the euro extended losses after further data showed that US home sales unexpectedly fell, declining 3.6% last month to an annual rate of 402,000, disappointing market forecasts that expected a 2.6% rise.
  
• Analysts noted that the soft housing sales figure offset positive durable goods orders, given that the latter data is generally volatile and sometimes does not represent the whole economic story.
  
• In trading today, investors will be eagerly awaiting US 3rd quarter GDP data, released at 12:30.

Sterling edged up against the dollar and is currently consolidating over 1.64 ahead of US GDP data

Sterling closed marginally up against the US currency yesterday, although the price was pulled back significantly following weak US housing data.

• In early trading, the pound lost ground to the dollar as falls in equity prices encouraged investors to trim their exposure to perceived higher risk currencies.
  
• UK stocks slid to a three-week low, helping to push the price down to 1.63, well under a level just below 1.67 reached only a week ago.
  
• The pound was then able to make slight gains in the afternoon after positive durable goods data weakened dollar demand, but the pair found resistance at 1.64.
  
• This data was then offset in the afternoon after it was revealed that sales of new homes in the US declined in September, against analyst expectations of a slight increase, which supported an upside movement
  
• In trading today, markets will take direction from the US third-quarter GDP figure at 09:30, which is predicted to show a growth rate of 3.3%. Should it undershoot this forecast, investors are likely to move back into the dollar.

Falling global equities enabled the pound to post gains against the euro

The pound continued to advance against a broadly weaker single currency yesterday, hitting a six-week high of 1.1167 as investors trimmed their euro holdings.

• Preliminary CPI data from Germany revealed that consumer prices remained flat on the year in October. Monthly data showed that the index did rise by 0.1% in October from September, though this rise failed to garner support for the euro.
  
• The markets also saw a slight withdrawal of risk activity yesterday as weak housing data in the US renewed concern over the health of the global recovery.
  
• The data dragged European equities down to three-week lows, which appeared to impact more severely on the single-currency, enabling the pound to gain.
  
• This morning, the pound is consolidating its position above 1.1100, with analysts reiterating that sterling is likely to remain in a holding pattern until next week’s BoE asset purchase decision.
  
• Investors are cautious amid uncertainty over whether the Central Bank will extend their quantitative easing programme, and so sterling movements may continue to be dictated by risk appetite in over the coming days.