Kiwi traded strongly yesterday, buoyed by rising risk appetite following improved equity prices

The pound closed down nearly a cent against the kiwi dollar yesterday, but recovered significantly from a one-week low of 2.2712 hit earlier in the day.

• The high-risk kiwi was the biggest gainer against the US dollar yesterday, which spilled over into the kiwi/sterling rate, pushing the former higher.
  
• Global equities rallied strongly as risk appetite came firmly back to the table following a move by the UAE central bank to reassure debts built up by Dubai banks.
  
• The kiwi was also found support as the yen was broadly sold following a decision by the Japanese central bank to extend monetary policy easing measures to fight deflation and help the ailing economy while holding rates at 0.1%.
  
• The New Zealand dollar is continuing to trade strongly today as investors' appetite for riskier higher-yield currencies improves, buoyed by receding worries over Dubai's debt problems and strong Asian equity prices.

Aussie eventually found traction as risk return, but found little support from the 0.25% rate rise

The pound steadied itself against the aussie after a sharp fall on Monday, edging slightly higher yesterday as markets speculated that the RBA may now slow its rate of tightening.

• Early on Tuesday morning, the Reserve Bank of Australia made their third rate rise in row, adding another 0.25% to the base rate, which now stands at 3.75%
  
• In lieu of the news the aussie did back off slightly against sterling, with the price briefly pushing back over 1.80, as investors anticipated that the RBA may now pause and wait for the economic data before they tighten monetary policy further.
  
• However the aussie was able trim losses as global equity markets climbed higher and gold prices hit a record high for the second straight day.
  
• In trading this morning, the aussie is moving higher, currently up over a half a cent, as fears ease over the impact of the Dubai debt crisis, increasing appetite for riskier assets.

Positive data and higher stocks enabled the single currency to consolidate over $1.50

A broadly weaker US dollar dropped 0.5% to the euro yesterday as positive talks in Dubai encouraged demand for higher-risk assets.

• The US dollar came under pressure as concerns eased about Dubai's debt-related problems, which supported a rebound in global equity markets, reducing haven demand.
  
• Leading European indices erased Monday's losses, gaining over 2.0% on the day. The US markets followed suit, opening the session with gains beyond 1% as fears from Dubai World's debt crisis waned with the UAE Central Bank offering financial support to troubled banks in the region.
  
• The dollar trimmed its losses slightly in the afternoon through after the US ISM Manufacturing PMI Index declined to 53.6 in November from 55.7 in October, a somewhat larger decline than the 55.0 expected by the analysts.
  
• The data did show that manufacturing activity continued to expand in November though, limiting the haven appeal.
  
• Markets will be watching an important US employment figure released today at 13:15, which is expected to show that 155,000 jobs were lost in November, a near 25% improvement on October.

As concerns over Dubai ease, the haven appeal of the USD is beginning to soften

The pound advanced against the dollar yesterday, up 1.0%, as UK house prices continued to rise and as concerns eased that a delay in Dubai's debt payments would hurt UK lenders.

• The pound snapped three days of losses against the US currency after Nationwide Building Society said the average cost of a home in the UK increased 0.5% in November. The data offset a larger than expected decline in the manufacturing sector.
  
• Meanwhile, Dubai World began negotiations to restructure about $26 billion in debt and said the remainder of its $59 billion of liabilities was on "a stable financial footing."
  
• Sterling managed to extend gains after US data showed the manufacturing sector grew in November, though at a slower pace, while pending home sales rose to a three and a half year high in October.
  
• US pending home sales rose 3.7% in October, against market expectations of a decline of about 0.6%, which shows that construction activity in the US might be about to come out of a long lasting slump. The greenback softened on the improved economic outlook.
  
• A strong showing in global equity prices also supported a move away from the US currency, with the FTSE up 2.3% and the Dow Jones also closing up well over one percent.

The pound edged higher against the euro yesterday, buoyed by strong equity prices

Sterling made up over half a cent on the single currency, erasing losses incurred at the beginning of the week, to close marginally above 1.10.

• In early trading, a Nationwide survey revealed that UK house prices are continuing rise, increasing by a further 0.5% in November, which boosted demand for the pound and offset weaker manufacturing PMI data.
  
• UK house prices have now risen for the seventh consecutive month, helped by better-than-expected news from the job market.
  
• The UK manufacturing purchasing managers' index fell to 51.8 in November, some way below both the market forecast of 54.0 and the previous month's revised figure of 53.4.
  
• Sterling came under pressure on the data, but analysts said that a general move towards risk as global equity markets surged, led to an appreciation of sterling.
  
• In addition, although the manufacturing figure was weaker-than-expected, it still shows that the industry is expanding, encouraging the consensus that the UK pulled out of recession this quarter.
  
• So far today the pound is trading slightly lower although the pair are likely to remain relatively range bound, hovering around 1.10, as there are no major economic announcements in either the eurozone or the UK.