Sterling falls vs. euro on flat FTSE

Sterling fell by 0.99 cents (0.84%) against the euro yesterday to close the day at 1.1686.

• In early trading yesterday sterling dropped by over a cent against the euro, after a tumble on US stocks overnight prompted London equities to head lower initially.
  
• The pound fell despite better-than-expected figures released by the British Bankers’ Association, which showed the number of mortgages approved for house purchases in May rose 15.8% on a year earlier, ending months of annual declines. However, approvals remain well below historical averages.
  
• In trading so far today the pound has continued its slide against the euro, as investors eye the large amount of data out today.
  
• There are no major economic releases due in the eurozone today, whilst in the UK there are a series of announcements out. At 11.00 BST, CBI Realised Sales are out, followed by Inflation Report Hearings at 14.30 BST. Finally, Bank of England Governor Mervyn King is due to give a speech at 15.45 BST.

Sterling edges ahead of US Dollar after choppy day's trading

In a choppy day’s trading yesterday, sterling strengthened by 1.07 cents (0.65%) against the US dollar to finish at $1.6452.

• In early trading yesterday the pound weakened against the dollar after heavy falls on US and Asian stock markets overnight rocked risk appetite.
  
• However, recurring concerns about reserve currency diversification helped the pound yesterday, after ratings agency Moody’s said one threat to the US’s triple-A sovereign credit rating would be if it lost its status as the world’s primary reserve currency.
  
• Investors were nevertheless cautious about taking on large positions ahead of the US Fed’s latest interest rate decision due later today, capping sterling’s gains.
  
• In addition, sterling also lost momentum against the greenback after US data showed sales of previously owned homes in the country rose at a slower-than-expected pace in May.
  
• In trading so far today, the pound has continued its rise against the dollar as investors prepare themselves for a raft of data out today.
  
• In the US, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally and most importantly, at 19.15 BST the US Fed gives their latest interest rate announcement and statement. In the UK, CBI Realised Sales are out at 11.00 BST, followed by Inflation Report Hearings at 14.30 BST. Lastly, Bank of England Governor Mervyn King is set to give a speech at 15.45 BST.

Euro up over 2 cents vs. US Dollar

The euro rose considerably against the euro yesterday, strengthening 2.1 cents (1.51%) to close the day at $1.4076.

• In early trading yesterday the single currency rose sharply against the greenback, after European equity markets stabilised following steep falls on US equities overnight. On Monday, the DOW suffered its worst one-day loss in two months.
  
• The dollar also fell as the market awaited the outcome of a US Fed policy meeting later today, and a record $104 billion in US debt issuance this week. Traders will be watching closely to see what the Fed says about the economic outlook and its debt-buying programme, with markets skittish over the possibility of dovish comments.
  
• The single currency’s gains were also slightly capped by US housing data released mid-afternoon, which showed a slower-than-forecast rise in sales of previously owned homes.
  
• In trading so far today the euro has continued its rise against the greenback, as investors brace themselves for some important announcements out in the US.
  
• First, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally, the US Fed is to deliver its latest interest rate announcement and statement at 19.15 BST.

Aussie makes small gains over sterling

The aussie made small gains against the pound yesterday, as investors wait on the sidelines ahead of the Federal Reserve’s policy decision due this evening.

• The US Fed is set to issue a statement after its latest policy meeting at 19.15 BST today, with some investors suggesting the central bank may try and curb speculation of any policy tightening this year.
  
• Traders are also wary of taking large aussie positions at present, as they are undecided about whether recent weakness in equity markets was just a short-term pull-back, or the start of a more protracted decline.

Kiwi makes strong gains vs. sterling as equities flat

The New Zealand dollar made strong gains against sterling yesterday, gaining 2.75 cents against the pound as investors reconsidered riskier assets.

• A flat day on London equities, following heavy falls the day before, led investors to sell the pound and the US dollar to buy back into higher-yielding currencies.
  
• Today, investors will turn their attention to the raft of economic releases out in the UK and US.

Polish zloty in choppy trading, rate decision tomorrow

It was a choppy week’s trading between sterling and Polish zloty last week, with economic releases first weakening and then strengthening the Polish currency. Polish producer prices figures released on Friday revealed a worse-than-expected rise in the annual rate by 3.7% in May, down from April’s revised 4.8% rise. This prompted a weakening in the zloty, however industrial output figures released the same day gave it a boost after they revealed a slowing in the pace of decline in the sector. Industrial output in May fell by an annual rate of 5.2%, which is slower than a revised 12.2% year-on-year decline in April, according to figures released by the Polish government. The zloty’s rally was further aided yesterday following a positive inflation figure, excluding food and energy prices, which showed a rise to 2.8% on the year in May from 2.6% in April. This figure was slightly above the forecasted figure of 2.7%. Attention has now turned to tomorrow’s Polish interest rate decision, where most analysts are forecasting a rate cut to 3.50% following the fall in inflation.

Sterling falls vs. euro despite ECB's refi

The pound weakened by 0.44 cents (0.37%) against the euro yesterday to close the day at 1.1785.

• In early trading yesterday, sterling strengthened against the euro, hitting its highest level since December ahead of the European Central Bank’s first ever one-year refinancing operation tomorrow.
  
• This announcement overshadowed better-than-expected German IFO Business Climate figures out mid-morning.
  
• However, weak London equities eventually dragged the pound into negative territory. The FTSE 100 finished down 111.88 (2.57%), with British Airways taking a particular hit, falling as much as 8% at some points.
  
• In trading so far today, the pound has continued its decline against the single currency as investors again take their lead from broader market movements. There are no major announcements due in the UK or the eurozone today.

Sterling weakened after London equities fall

The pound weakened considerably against the US dollar yesterday, falling 1.47 cents (0.89%) to finish at $1.6345.

• In early trading yesterday, sterling weakened against the dollar as investor jitters before tomorrow’s US Fed policy meeting helped the US currency and curtailed demand for higher-risk currencies like the pound.
  
• A survey released by UK property website Rightmove show ed a 0.4% fall in house prices in June after four months of rises also weighed on the pound.
  
• With data thin in the UK this week, sterling will generally take its lead from broader market movements, particularly London equity markets. The FTSE 100 finished the day down 111.88 (2.57%) yesterday, pulling the pound down with it.
  
• In trading so far today, the pound has continued its slide against the greenback, as investors warily eye tomorrow’s US Fed interest rate meeting.
  
• There are no major announcements due in the UK today, whilst in the US Existing Home Sales are out at 15.00 BST.

Euro weakens ahead of important announcements

The euro weakened by 0.73 cents (0.52%) against the US dollar yesterday to finish the day at $1.3866.

• In early trading yesterday, the euro weakened against the dollar as investors became wary ahead of two important announcements by their respective central banks tomorrow. The European Central Bank is set to announce its first ever one-year refinancing operation, whilst the US Fed is due to give its latest monetary policy and interest rate decision. Speculation surrounding these announcements bolstered demand for the safe-haven of the greenback.
  
• The single currency fell despite better-than-forecast German IFO Business Climate data out mid-morning. The index rose this month to 85.9 from 84.2, ahead of analysts’ forecasts of 85.1.
  
• In trading so far today, the euro has resumed its slide against the dollar as investors continue to eye tomorrow’s announcements warily.
  
• There are no major economic releases due in the eurozone today, whilst in the US Existing Home Sales are out at 15.00 BST.

Aussie weakens after SMH piece predicts rate cut

The aussie weakened for the second day running against the pound yesterday after an opinion piece in the Sydney Morning Herald argued the next Australian interest rate move will be down.

• In addition, a prediction by the World Bank that the global recession will be much deeper than previously expected also hit higher-risk currencies like the aussie.
  
• Sterling strengthened despite a fall on London equity markets yesterday, which finished down over 2.5%.