Sterling fell just 0.03% against the kiwi yesterday, but has suffered in trading this morning

The pound slowed its rate of decline against the kiwi yesterday, falling just 0.03% as weak Asian trading dulled risk appetite.

• The pound slipped lower, but stemmed its rate of decline as demand for the higher-yielding currency was curbed following weaker trading on the Asian markets.
  
• Sterling has been broadly sold recently following comments from the King and BoE, however the strong European stocks prevented the pound from sliding too sharply yesterday.
  
• Major European and US stock indices climbed between 1 and 2%, firming up confidence in the global recovery, and lending slight support to the ailing pound.
  
• In trading this morning however, the kiwi has already advanced 0.7% following positive building consents data from New Zealand, which has encouraged investor demand.
  
• Analysts say that with stocks continuing to push higher and central banks not yet ready to unwind stimulus measures, the New Zealand dollar is likely to maintain its upward trend.

Aussie has advanced further vs sterling as talk of interest rate hikes is renewed

Sterling slid for the third consecutive day against the Australian currency yesterday as the pressure of recent events and statements continued to weigh heavily.

• The aussie pushed higher, gaining another 0.9%, as the pound failed to shrug off comments made last week that a weak currency was in keeping with the BoE’s policy.
  
• The aussie dollar was also supported from a rise in commodity prices, particularly gold, which rallied back above $1000 per ounce yesterday.
  
• Additionally, risk sentiment among investors returned as stocks in Europe and the US traded strongly, buoying demand for riskier assets.
  
• In trading this morning the aussie has continued to advance, supported by renewed talk that the Reserve Bank of Australia would start raising rates in November.
  
• The speculation came after a central bank watcher said the RBA was almost certain to hike rates by 25 basis points in both November and December, which would make the Australian currency an even more attractive bet for investors searching for bigger returns.

Dovish words from the ECB president dragged the euro lower against the dollar yesterday

Talk of a slow recovery in the eurozone strengthened demand for the dollar yesterday allowing it to recover 0.5% to 1.4618.

• Support for the single currency was curbed slightly following the words of European Central Bank President Trichet, who spoke yesterday of a slow recovery in the 16-nation region.
  
• The governing council of the ECB considers that it would be premature to declare the crisis over, stating that now was not the time to implement an exit strategy.
  
• Additionally, analysts have said that on the whole, although the euro / dollar price is biased to the upside in the medium term, the single currency is now being challenged by corrective weakness.
  
• The single currency has dipped lower again this morning, currently trading marginally below 1.46, as investors hold off taking positions ahead of important US data this afternoon.
  
• There is a consumer sentiment survey out in the US at 15:00BST, which is forecast to reveal improved confidence in the market, which could weaken demand for the dollar.

Pound fell lower against the dollar yesterday, but found some support to ease its rate of decline

Sterling fell as persistent bearish sentiment pushed it to an intra-day four-month low of $1.5796 against the dollar, before closing at $1.5882.

• The pound managed to pull back slightly from early losses after Chancellor Alistair Darling made a speech in which he reiterated the need to curb “reckless” bonuses.
  
• His comments suggested that the government would be taking forceful steps to firm up the fragile banking system which returned a certain amount of confidence to investors and prevented the pound from falling further.
  
• The pound also benefited from slight profit taking and rising stocks, but analysts said that despite expectations for improving economic data, the sterling / dollar price looks vulnerable to a further downside push with strong resistance materialising around 1.5750.
  
• This morning, sterling is trading marginally lower as investors await important economic data released in the UK and the US today.
  
• CBI realized sales are out in Britain at 11:00BST, whilst in the US, data from a consumer confidence survey at 15:00BST is likely to reveal improved sentiment, which could stem demand for the haven currency.

Pound edged higher against the euro yesterday and has consolidated its position this morning

Having traded in the red for most of the day, the pound rebounded in the afternoon to close the day marginally up at 1.0859.

• ECB President Jean-Claude Trichet in a speech yesterday stated that the European economy will likely recover slowly in the coming months.
  
• Trichet continued, saying that it was too early for the ECB to stop pumping liquidity into the economy or to raise interest rates, which slowed demand for the single currency.
  
• Additionally, data showed that consumer prices in Germany fell faster than expected in September, which was a steeper decline than the market had looked for, capping the euro’s gains .
  
• In the UK, Hometrack Ltd revealed that UK house prices increased by the most in two years during September as confidence in the property market improved, although the news went relatively unnoticed by the market.
  
• Second quarter current account data and a revised GDP figure are out today at 09:30BST with forecasts predicting slightly improved numbers from the first quarter, which could lend support to the pound.

Bearish sentiment towards the pound on Friday allowed the kiwi to make substantial gains

The kiwi dollar climbed another 1.2% on Friday, as demand for the high yield currency remained strong in the wake of positive economic data.

• Investors continued to move their funds into the riskier currency on Friday as data in the US revealed a strengthening economic recovery.
  
• Selling pressure on the pound was also high on Friday as comments from the BoE revealed their willingness to see the currency remain weak, undermining investor confidence.
  
• The kiwi also received support from a slight rise in oil prices. The New Zealand dollar tends to fair well when commodity prices are on the up owing to the nature of the economy.
  
• The kiwi has retreated in trading this morning though as investors turned away from riskier assets following hefty losses in the stock markets.
  
• Stocks turned sharply lower on fears over the strength of the economic recovery and concerns that markets had reached their peaks, which has enabled the pound to recover around 0.1% so far today.

The pound has reversed recent losses against the aussie, supported by rising risk aversion

The pound lost another 1.0% to the aussie dollar on Friday to close at 1.8373, as selling pressure remained strong.

• The aussie dollar reached a twenty-four year high against the pound on Friday, as King’s comments continued to weigh heavily on the pound.
  
• On Thursday, the BoE governor made it clear that he was not too concerned about the current weakness of the pound, and that he was in fact in support of its current value in order encourage a rebalance towards an export led economy.
  
• The news reaffirmed that interest rates would remain low for some time, which encouraged investors to sell the pound in favour of the high-yielding aussie.
  
• In trading this morning however, the aussie has capped its gains as weaker Asian stocks, soften demand for the Australian currency.
  
• Rising risk aversion has also sent the price of gold back below $1000 per ounce, which has put further pressure on the aussie, with pair currently trading steadily around Friday’s closing price.

The euro made ground against the dollar on Friday, but has relinquished its gains this morning

The euro made gains on Friday, following a two day slide, buoyed by improving economic data in the US, and closing at 1.4689.

• The single currency initially lost ground against the greenback as poor data on US core durable goods orders initiated a slight dollar rally.
  
• However, the euro erased early losses after data showed US consumer sentiment improved in September while sales of US homes edged higher in August.
  
• Consumer sentiment rose to its highest point since February 2008, supporting a rise in stock indices, which picked up from earlier losses, adding further support to the euro’s rise.
  
• Additionally, a G20 statement suggested that they aim to continue to provide support for the global economy, which put further selling pressure on the dollar.
  
• In trading this morning though, the single currency has lost nearly 0.5%, dropping back to around 1.4620 following a rise in risk aversion spurred by the Asian markets.

The pound fell below $1.60 on Friday, and rising risk aversion has seen it tumble further this morning

Confidence in the UK currency remained weak on Friday in the wake of comments made by Mr King and the BoE, with the price sinking below $1.60.

• Having initially fallen to a four month low of 1.5921 in the early hours of Friday morning, the pound proceeded to consolidate above 1.60, with analysts suggesting that a bullish correction was expected in the wake of Thursday’s plunge.
  
• However, bearish sentiment towards the pound soon returned, with traders continuing to dump the British currency on perceptions that the BoE would lag other countries in tightening its loose monetary policies.
  
• In the afternoon, a worse-than-expected reading in U.S. durable goods orders triggered a risk aversion rally, which also helped to send the pound back down near its intra-day low.
  
• Additionally, analysts noted that the pound’s slide led Japanese retail traders to liquidate sterling/yen long positions, adding further selling pressure.
  
• In trading this morning, the pound is down half a cent as a rise in risk aversion is spurred by weaker stock trading in the Asian markets.

Sterling continued to slide vs the euro on the run up to the weekend, but has capped its losses this morning

Sterling fell yet further on Friday on perceptions that the UK currency would be allowed to weaken to help the fragile British economy.

• The pound dropped to a fresh five-month low against the euro on Friday as traders continued to sell sterling following comments from Mervyn King that sterling’s fall was helpful in rebalancing the UK economy.
  
• Some analysts have suggested that these comments which have undermined the UK currency, have become a new policy tool with which the central bank can kick-start the economy.
  
• Pressure on the pound was also stemming from the UK’s budget deficit and continued speculation that the BoE might yet loosen monetary policy further.
  
• In trading this morning, slight profit taking has seen the pound cap its losses, with the pair currently trading around 0.15% up for the day.
  
• Market players say that the outlook for sterling does remain bearish though, and it is set to remain the weakest of the major currencies for some time.