Concern over the strength of the global recovery dulled demand for the kiwi yesterday

Sterling was up nearly two cents, or 0.9% against the kiwi, as risky-assets took a broad downturn with the pair closing up at 2.2613.

• A drop in European equities was mirrored by the major indices in the US and Asia, which also closed in the red, discouraging demand for higher-yielding kiwi.
  
• The New Zealand dollar also lost ground to the pound after Chinese Premier Wen Jiabao said the world economy faces a bumpy recovery, discouraging risk demand.
  
• "The world faces a gradual and uneven recovery from the worst financial crisis since the Great Depression," China's Wen said in a televised speech in Beijing.
  
• The kiwi is continuing to lose ground in trading this morning as investors turn to profit taking ahead of the weekend and as policymakers warn that economic recovery is still fragile.

The waning of risk appetite and slight profit taking enabled the pound to climb against the aussie

The pound reversed a run of losses yesterday, advancing 0.7% on the aussie, as demand for the riskier currency was dulled as risk appetite waned.

• The aussie retreated from two-week highs as the rally in global stocks markets stumbled slightly, reducing investors' willingness to take on risky trades.
  
• The loss of risk gave traders an opportunity to cash in on aussie strength and take profits ahead of the week, which enabled the pound to close the day up at 1.7944.
  
• Analysts noted that market participants were unwilling to take up positions in risky assets ahead of statements from policymakers in the build up to this weekend's APEC Summit and next week's US-China Summit.
  
• In trading this morning the pair are trading sideways, holding around the overnight closing price. However, analysts are expecting the aussie to remain strong over the longer term with high gold prices and a weak US dollar supporting demand for the Australian currency.

USD found support in trading yesterday from weaker stocks and bullish comments from a US policymaker

The single currency fell sharply against the dollar, losing well over a cent as investors retreated from risk activity on lower equities.

• The dollar held the line on gains against major counterparts, getting a boost as investors turned to safe-haven assets as stocks on Wall Street appeared unable to pass through key resistance levels.
  
• The dollar advance was also bolstered by a report showing initial US weekly jobless claims were lower than expected.
  
• US initial jobless claims decreased to 502,000 in the week ended Nov. 7, from a revised 514,000 in the previous week, the Labor Department reported.
  
• One analyst also cited the dollar's strength as a result of the position-driven market. People went short on the dollar on Wednesday, and after stops losses were triggered around 1.50, traders bought it back after.
  
• In addition, the dollar was supported after US Treasury Secretary Timothy Geithner said the government's borrowing needs in the future would be substantially less than expected.

Stumbling equties enabled the dollar to make hesitant gains yesterday

The pound edged down against the US dollar as weaker equities slowed demand for risk appetite.

• In early trading, sterling fell to a one-week low against the dollar as investors absorbed Bank of England chief Mervyn King's comments from Wednesday that left the door open to more asset purchases to keep monetary policy loose.
  
• The inability of the Dow Jones Industrial Average to break through resistance at the 10,300 level provided the dollar with some modest relief, but analysts cautioned that a "much weaker Dow" would be needed for there to be a significant dollar rebound.
  
• The US Labor Department also reported yesterday that initial state jobless benefit claims fell to 502,000 in the latest week from a revised 514,000 in the prior week. The consensus forecast was for initial claims of 510,000.
  
• In addition, the dollar found slight support after Timothy Geithner, US Secretary of Treasury said that "we are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system."
  
• Investors are now shifting their focus to a meeting of Asia-Pacific nations and other Asian regional issues, including a U.S. state visit to China next week.

The pound recovered in trading yesterday and has continued to post gains against the euro this morning

The pound rallied strongly against a broadly weaker euro yesterday, recouping losses incurred on Tuesday to close the day back up at 1.1166.

• The euro came under slight pressure after data that showed industrial production in the 16-nation euro zone rose 0.3% in September. Compared to the same month last year, output was down 12.9%.
  
• The euro also suffered heavily against the US dollar and traders cited that heavy sell off as cause for the single-currency's weakness against the pound.
  
• Analysts noted that overall action in currency markets remained largely driven by technical considerations yesterday amid a lack of major economic data to drive foreign-exchange trading.
  
• In trading this morning, the euro has come under further pressure, after both the Germany and French economies undershot their growth forecasts for the third quarter.
  
• It has been revealed that in the three months through September, German GDP was 0.7%, marginally below the 0.8% prediction. Meanwhile, French GDP for the same period was at 0.3%, some way below the 0.6% forecast.
  
• The pair are currently hovering just above 1.12