Strong commodity prices enabled the kiwi to post gains against the pound yesterday, but the sterling price has risen again this morning

The pound lost ground to the kiwi in trading yesterday, relinquishing strong gains made on Thursday of last week, as a surge in risk appetite boosted demand for the high-yielder.

• Strong equity and commodity prices on the European and US sessions were supportive of kiwi buying, driving the price higher. Oil reached up to $80 per barrel, whilst gold rallied to another record high.
  
• The New Zealand dollar is again under pressure this morning as Asian equities failed to rack the strong run on Wall Street. The Nikkei closed down 1.0% overnight.
  
• Currently the pound is trading up 0.5% today with the price hovering just below 2.28. Though analysts have said that the price could be susceptible to a break higher as investors seek to cash profits ahead of a US holiday this Thursday.

Aussie was stronger yesterday as risk strengthened, the reverse is true of trading this morning though

The aussie continued to climb higher against the pound yesterday, finding support as risk appetite returned to the market.

• Global equities climbed near two percent, which supported a move away from the dollar and yen safe-haven currencies, and into high-risk denominations.
  
• Gold reached another record high yesterday, breaching $1170 per ounce as concern over dollar weakness encouraged investors into the precious metal, which supported demand for the commodity-linked aussie dollar.
  
• However, Asian equities traded in the red overnight, which has dulled demand for the aussie, enabling the pound to posted gains this morning with the price currently back over 1.80.
  
• Analysts have noted that hedge funds have been among the biggest sellers of the aussie in recent days as they move to cash in profits before year-end.

Comments eluding to extended low interest rates in the US helped the euro climb back near $1.50

A return of risk appetite and dovish comments from a Federal Reserve official put the dollar on the back foot, enabling the euro to climb a full cent but was again capped below 1.50.

• The dollar was broadly weaker on Monday as risk sentiment improved on the back of gains of equity and commodity markets.
  
• In addition, a Federal Reserve official affirmed expectations that US interest rates would remain low for some time.
  
• St. Louis Federal Reserve President James Bullard said on Sunday that the US central bank should keep its mortgage-related asset buying programme beyond a planned end-date in March.
  
• In the afternoon, positive US housing data further dampened the currency's safe-haven appeal.
  
• The report showed an above expectations jump in existing home sales in October, which further spurred the market's risk appetite and added to bearish US dollar momentum.
  
• In trading this morning, the greenback has recouped some of its losses, bringing the price down to 1.4900 following weaker Asian equities and some investors closed dollar-short positions ahead of the Thanksgiving holiday.

Sterling posted gains against the greenback yesterday in the wake of stronger equities

Sterling posted gains over a cent against the US dollar yesterday as strong equity prices encouraged investors away from the haven currency.

• Sterling rose against a broadly weaker dollar on Monday, rebounding from two-week lows hit last week, as risk-taking sentiment re-emerged on views US monetary policy would remain extremely loose for some time.
  
• Stock markets on both sides of the Atlantic enjoyed strong gains with London's FTSE index closing up just shy of 2.0%, which boosted demand for the higher-risk UK currency.
  
• The pound also found traction as the market priced in an upward revision to the UK 3 rd quarter GDP figure. Positive economic numbers have supported claims that the economy did not contract by as much as was reported, which has lent support to the pound.
  
• However, in trading this morning the dollar has trimmed losses as Asian stocks failed to follow up a stronger day on Wall Street.
  
• Analysts have noted that trading is likely to be thin and price moves exaggerated ahead of the US Thanksgiving holiday on Thursday.

There was little movement in the sterling/euro price yesterday with little economic data to give direction

The pound closed down for the fourth consecutive day against the single currency yesterday, though trading remained range bound with the price just nudging below 1.11.

• The euro found initial support after data showed a flash reading of the purchasing managers' services index in the euro zone grew at its fastest pace in two years in November.
  
• PMI data from Germany and France was also supportive, though the market took little direction from the figures and sterling gradually recovered its early losses, buoyed by higher equities.
  
• In his speech in the afternoon, ECB President Trichet again reiterated his stance on the need for a strong US dollar. His comments had little effect on the sterling/euro price with the markets aware that no new information was being offered.
  
• Indeed the price remained tightly range bound throughout European trading hours, with little economic data for the markets to take their lead from.
  
• Trading this morning could be more volatile with the UK's Inflation Report hearings due to start at 09:45, which should give investors a good indication of the UK's economic outlook.