Kiwi traded strongly yesterday as risk appetite was buoyed follwoing an encouraging announcement from the Bank of America

The kiwi dollar was higher against a broadly weaker sterling, which came under pressure following weak economic figures.

• The UK services sector data revealed that the industry expanded at a slower rate than in previous months, breaking its upward trend, and dulling demand for the pound.
  
• The kiwi was also buoyed as the safe haven appeal of the US dollar and Japanese yen came under pressure following an announcement from the Bank of America to repay bailout funds.
  
• The New Zealand currency climbed by just over a cent, but was unable to push higher as weak manufacturing data from the US undermined risk appetite.
  
• The pound is up in early trading though as investors pare back risky bets ahead of important US employment figures.

A weak sterling edged lower against the aussie yesterday but investors are paring back their risk trades this morning

The pound slipped back below 1.79 against the aussie dollar, under pressure from weak UK services data and as positive news from the Bank of America boosted risk.

• In early trading, the Bank of America announced that they are going to start repaying taxpayer bailout funds, which gave a boost to investor confidence, lifting perceived riskier currencies to the detriment of the safe-haven currencies.
  
• In the UK, weaker-than-expected services sector data raised concerns over the strength of the economic recovery, which put the pound on the back foot throughout the day.
  
• In trading this morning though, the price is moving back in sterling's favour as investors lock in profits to protect themselves against sharp market moves before key US employment data later this afternoon.
  
• The monthly non-farm payrolls data tends to spark choppy trading and investors typically turn cautious ahead of its release, exiting long positions in "riskier" currencies.

The euro trimmed stronger early gains after weak US data saw investors pare back risky bets

The euro rose to a 16-month high in early trading, but pared back its gains against the dollar, to close just 0.05% higher after weak data from the US offset risk appetite.

• The dollar was under broad selling pressure in the morning after the Bank of America announced it will repay $45 billion of funds received under the Troubled Asset Relief Program.
  
• The single currency received a further boost, spiking briefly over $1.51 following the European Central Bank's announcement that it will start to unwind extreme stimulus measures that it considers are no longer appropriate now that the recession is easing.
  
• The ECB President, Jean-Claude Trichet, said that the December installment of the 12-month refinancing operation for banks would be the last.
  
• However, the euro trimmed gains as Trichet added the current interest rate remains appropriate, and he reiterated that the winding down of stimulus measures did not signal a change in rates.
  
• Later in the afternoon session, weak data from the US manufacturing sector saw the euro pull back further as concern grew over the strength of the US recovery.
  
• The data helped fuel a late sell off in US equity markets, further sapping risk demand, and supporting a slight dollar rebound.

A broadly weaker sterlingl lost ground to the USD yesterday but has posted gains in trading this morning

The pound dropped nearly a cent against the US dollar following a below forecast figure from the UK services sector.

• Sterling traded strongly against the haven currency in early trading after the Bank of America announced that it was ready to repay taxpayer bailout funds, which boosted investor confidence.
  
• However, the pound came under pressure after data revealed that the UK services sector expanded at a slower rate in November than the market had anticipated.
  
• Although the figure marked the seventh consecutive month above the 50 level, which indicates expansion, the below-forecast headline number was enough to push the pound off an earlier one-week high against the dollar.
  
• In the afternoon, the US currency received support following data that showed US manufacturing contracted in November after growing modestly the prior month, which raised doubts about the strength of the US economy and undermined risk appetite.
  
• The manufacturing data offset more encouraging figures from the Labour market which again showed a slowing rate of unemployment claims this week.
  
• In trading this morning, the pound has risen nearly half a percent as investors await key employment data released in the US at 13:30.

Weak UK data brought the pound down yesterday, but it is recovering losses this morning

Sterling fell by 0.6% against the single currency yesterday after a survey showed Britain's services sector grew more slowly than expected in November.

• The Chartered Institute of Purchasing and Supply activity index fell to 56.6 last month from October's two-year high of 56.9. That was the seventh consecutive month above the 50 level, which indicates expansion, but below expectations for a rise to 57.0
  
• As the services sector is regarded as the driving force of the UK economy, any hesitation in its expansion causes concern for the UK economy and is therefore sterling negative.
  
• The euro received a boost in the afternoon after the ECB announced that it would start to remove loose monetary policies, telling reporters that "not all our liquidity measures are needed to the same extent as in the past."
  
• Trichet hinted about an exit strategy so the knee-jerk reaction was euro positive, but he was explicit in reiterating that the withdrawal of stimulus did not signal a change in interest rates, which capped gains.
  
• This morning the pair is continuing to trade within range, with the price currently hovering back over 1.10.