Pound makes marginal gains vs kiwi following a decline in risk appetite

Dulled risk sentiment for higher risk currencies yesterday slowed the pound’s rate of decline against the New Zealand dollar, closing the day yesterday at 2.3768.

• Having made gains of 0.4% against the kiwi on Friday, the pound declined marginally in trading yesterday.
  
• However, the rate of decline was much diminished from last week, with the pound only losing 0.013 of a cent in yesterday’s trading.
  
• Following the RBA’s statement, the New Zealand dollar has also suffered slightly as risk appetite for higher-yielding currencies took a step back.
  
• As there is little data emerging from New Zealand’s central bank until there monetary policy statement on September 10 th, analysts have said that it will take a change in international sentiment toward risk to alter the kiwi current range.
  
• Indeed, the pound has begun gaining ground in trading so far this morning, recovering 0.12%.

Sterling gains vs aussie following dovish RBA statement

Having continued to lose ground on Friday, the pound has reversed the trend, following the RBA statement in the early hours of this morning.

• With European stocks and oil prices up on Friday, investors’ appetite for risk supported high-yielding currencies like the aussie.
  
• Sterling continued to lose ground yesterday following as investor sentiment was buoyed by the positive news emerging from the Japanese election and the corresponding improved Asian equities.
  
• The Australian dollar as capped its gains this morning however after the Reserve Bank of Australia said current monetary policy was still appropriate and left interest rates unchanged at 3.00%.
  
• Investors had widely expected the RBA to sound more hawkish, but their comments allowed the pound to recover, which is up over half a percent on the day.

Decline in stock prices, devalues the euro vs the US dollar

The single currency reversed early gains against the greenback following a decline in investor sentiment for "risker" currencies.

• The single currency lost ground on Friday as both the unemployment rate and the CPI flash estimate figures came in below expectations, reminding investors not to over-estimate the pace of the eurozone’s recovery.
  
• In trading yesterday, the euro was able to regain all the ground lost against the greenback, as inflation rates increased from -0.7% in July to -0.2% in August.
  
• The euro has failed to realise these gains agains today, with the single currency currently trading 0.15% lowers, as a decrease in European equity value erodes investment sentiment in the market.
  
• The eurozone unemployment rate was released today at 10:00BST, which revealed that unemployment remained at a high of 9.5% this month, which added selling pressure to the single currency.
  
• In the US, data on the manufacturing industry and home sales is released at 15:00BST.

Dollar recovers Bank Holiday losses following weak UK data

The pound made marginal losses against the greenback over the Bank Holiday, to close the day at $1.6288.

• Sterling traded marginally higher on Friday morning as data bolstered hopes that the UK will return to growth in the current quarter by reporting that the economy contracted by 0.7% between April and June, not 0.8% as previously stated.
  
• However, the greenback recovered its losses to close the day marginally up, as risk appetite was hindered by slightly weaker-than-expected consumer spending figures emerged from the US.
  
• Although trading was closed in London yesterday, sterling received a boost from robust gains in world stocks, resulting in improved risk appetite.
  
• In trading this morning, sterling has erased early gains against the greenback as investor sentiment was discouraged by weak UK manufacturing data and is currently trading at 1.6231.
  
• Demand for sterling could continue today if a US Manufacturing PMI produces a figure above 50, as predicted, which would indicate industry expansion and support risk sentiment. There is also important US home sales data released at 15:00BST today.

Pound fails to capitalize on Friday's gains vs the euro

Sterling failed to capitalise on gains made on Friday as investors remained cautious of overestimating the UK’s revised GDP figure.

• Sterling inched up on Friday after figures showed that the UK economy contracted at a slightly slower rate in the second quarter than initial estimates.
  
• The 0.1% revision, although better-than-expected, had a very limited effect on the pound, with investors remaining cautious following previous weak business investment data.
  
• Analysts warned that the small improvement did not obscure the severity of the UK recession and the challenges still facing the economy.
  
• Additionally, traders were hesitant to take on significant positions in the currency ahead of the Bank Holiday.
  
• In trading yesterday, the pound held steady against the single currency to close the day marginally down at 1.1364.
  
• Sterling started to recover its losses against the euro this morning following relatively unimpressive German retail sales figures which dulled support for the currency.
  
• However, worse-than-expected data released about the UK manufacturing sector at 09:30BST has hurt the pound, which is currently trading 0.23% down for the day.

Kiwi continues strong run agains the pound

The pound fell a further 0.5% against the kiwi yesterday in the wake of firmer stock markets to close at 2.3682.

• Gains made in the US stock indices were mirrored in the Nikkei 225 yesterday allowing the kiwi to continue its strong run against the pound.
  
• Demand for the New Zealand currency was further supported overnight as much improved data emerged about building approvals, which added strength to the country’s economic recovery.
  
• There was also support from the US where a better-than-forecast GDP figure improved investor sentiment about a global recovery and aided demand for higher-yield currencies.
  
• This morning however, the pound has already recovered half a cent against the kiwi as investors remain cautious over holding the currency over the weekend and decide to lock in their profits.

Aussie gains another 2 cents vs sterling

Sterling’s brief gains against the aussie on Wednesday were short-lived as it lost over two cents (1.0%) yesterday to close at 1.9384.

• Sterling suffered a substantial setback yesterday on the path to recovery following particularly weak business investment data that emerged well below its predicted level for the quarter.
  
• In addition, strong data was released in Australia in the early hours of this morning that saw a huge rise in private capital expenditure, reaffirming support for their economy recovery.
  
• The 3.3% figure was a vast improvement on the previous quarter of -7.3%, and pushed the pound down below the 1.94 level.
  
• Data from Australia has been relatively strong recently, suggesting that economy has a fair bit of momentum, and traders are now speculating that the Reserve Bank of Australia could raise interest rates as early as October.

Single currency reverses losses against greenback

The single currency was a beneficiary of heavy selling of the dollar late yesterday, gaining 0.6% to close the day at 1.4341.

• The single currency was able to reverse a 3-day downward spiral against the greenback following a couple of positive economic figures in the US.
  
• US GDP emerged as -1.0% last month, better-than-forecast, which enabled the single currency to drive higher against the greenback.
  
• Investment into riskier assets was further encouraged following data that revealed a fall in US jobless claims this week.
  
• The single currency also found support from the major US stock markets which made minor gains, reaffirming the strength of global recovery.
  
• In trading so far this morning the euro has capped its gains with the trading rate for the pair remaining around yesterday’s closing price.
  
• There are no major economic announcements out in the eurozone today, whilst in the US there is a consumer spending figure released at 13:30BST which should give a good gauge of the current economic receovery.

Pound starting to recover losses vs dollar

Following late selling yesterday evening, the pound was able to edge back up against the greenback to close the day nearly a half cent up at 1.6281.

• Sterling seemed to be firmly on track for its steepest monthly decline this year with it briefly dropping below the 1.62 mark yesterday.
  
• In the UK, both business investment and realised sales figures emerged well below their forecasts supporting the notion of a weak recovery and discouraging sterling investment.
  
• However, in the US, government data showed that the economy fell by less-than-expected in the second quarter, easing the market’s risk aversion, and enabling the pound to claw back some of the week’s substantial losses.
  
• Additionally, a poor day for the European equity markets was not mirrored on either the Dow or Nasdaq, which both achieved minor gains and supported riskier investment.
  
• Inflation figures are released in the US today at 13:30BST and are forecast to remain relatively unchanged from last month as forecasters remain wary of over-estimating the pace of recovery.

Weak economic data drove pound down yesterday

Sterling suffered again yesterday, after weak economic data threatened the stability of the UK economic recovery.

• Any gains that sterling made following the news that house prices rose for the fourth month in a row were offset by a far worse-than-expected realised sales figure, which added to the selling pressure already on the pound.
  
• The pound was further devalued as data also showed that UK business investment, seen by many as a prerequisite for recovery, fell by the most in 24 years, reinforcing the view that UK interest rates will remain low to revive the economy.
  
• Analysts immediately said that overall economic growth figures for the second quarter, due out today at 09:30BST, could be revised down, rather than up as some had been hoping.
  
• The pound was also undermined yesterday after the FSA chairman said that the UK financial sector might have become “too big for society.”
  
• However, in trading so far this morning, the pound has halted its slide against the single currency as investors consider locking in profits.