Kiwi suffered as risk aversion at the back end of last week, though stronger this morning

The kiwi dollar retreated to two and half month low against the pound on Friday as risk appetite took a sharp downturn as the Dubai debt issue deepened.

• The New Zealand dollar followed the broader market events and directions that unfolded at the end of last week with regards to the concerns arising over debt issues in Dubai.
  
• In response, sterling reached a high of 2.33 after a sharp pull back in risk activity saw investors trim their positions is the "riskier" currency.
  
• The kiwi is firmer this morning as investors are more confident and less risk averse after the UAE offered to help banks in Dubai, reducing fears of a debt default.

Sterling climbed higher against the aussie at the end of last week, but aussie buying as resumed this morning

The pound built on substantial gains from Thursday, hitting a three-week high against the high risk aussie dollar on Friday as investors pared back carry trades.

• Concerns over the Dubai defaulting on their debts led to a shift in risk sentiment at the end of last week, which dulled demand for the Australian currency.
  
• The sudden loss of risk in the market saw carry trades unwound as investor recouped their risky assets and bought back safe-haven currencies.
  
• The movement enabled the rally strongly against the higher-yielding aussie, posting a 3-week high of 1.8235, before capping its gains and closing the week at 1.8194.
  
• However, in trading this morning, the more common trend has resumed as fears that Dubai may not repay its multi-million dollar debt abated slightly, with the aussie rapidly recovering its losses as risk appetite returns to the table.
  
• The aussie is currently up over a cent against a broadly weaker British pound, which has come under pressure following a weak consumer confidence survey.

Volatility was high on Friday though the euro recovered to close the day near $1.50. It is climbing higher this morning

After a sharp sell-off, the euro recovered its poise to close the week just below $1.50, marginally down on the day against the US currency.

• Turbulence returned to currency markets towards the end of last week after questions were asked about the stability of emerging market debt.
  
• It should have been a relatively quiet Friday with the US effectively on holiday from Thursday onwards for Thanksgiving. But the lack of US trade only exacerbated volatility on foreign exchanges after Dubai asked creditors of its Dubai World holding company for a six-month standstill on debt repayments.
  
• In response, investors dumped risky assets in a knee-jerk reaction to the news, which saw the single currency drop near two cents in early trading.
  
• However, the euro was able to recoup most of its losses as European stocks recovered from their sharp losses on Thursday.
  
• Despite the Dubai shock, the dollar also remained subdued in the wake of the minutes from the Federal Reserve's latest meeting which appeared to give traders the green light to sell the US currency.
  
• In trading this morning, dollar selling has resumed after the United Arab Emirates offered emergency assistance to banks in Dubai, soothing market fears about a looming debt default.

Risk aversion remained high on Friday morning, though the pound did recover in the later sessions

Sterling initially plummeted to a three-week low against the US dollar on Friday, but recovered some 1.4% through the day to close only marginally down, just over $1.6500.

• Ongoing worries over Dubai's financial sector had the UK currency under pressure on Friday morning as concerns developed regarding the extent of the exposure of the UK banks to Dubai.
  
• In addition, trade continued to be volatile in a holiday-thinned market. US markets were on a shortened session after being closed the previous day for Thanksgiving Day holiday.
  
• However, the pound was able to recover some of its losses through the afternoon session as UK equities made a recovery, weakening demand for the haven currency.
  
• In trading this morning, the greenback is once again under pressure after Dubai soothed concerns about the looming debt default, which has encouraged investors to resume buying riskier currencies.
  
• Currently the pound is trading 0.2% up, despite a weak UK consumer confidence survey, with the price consolidating above 1.6500.

The pound made up significant ground to close Friday slightly higher than the euro

Having dropped to a one-month low of 1.0950 against the single currency on Friday morning, the pound steadily recovered to close the day marginally higher at 1.1010.

• Sterling continued to slide in early trading on concerns about the potential damage to the fragile UK banking sector from Dubai's surprise delay on debt repayments.
  
• On Wednesday, Dubai moved to restructure its biggest corporate debtor, Dubai World, and delay repayment on some of the company's $59 billion of liabilities.
  
• Major UK banks have made large investments in Dubai, which has exposed them to the financial problems facing the country. Additionally, Middle Eastern players have been big buyers of sterling in recent weeks.
  
• But the pound came off its lows as UK shares recovered, led by bank shares which were hammered on Thursday. London's FTSE 100 was up 0.8% on the day after falling sharply earlier in the session.
  
• In trading this morning the pound is approaching its one-month low against the euro after figures showed an unexpected fall in UK consumer confidence underlining ongoing weakness in Britain's economy.

Pound is moving higher against the kiwi dollar supported by an upwardly revised UK GDP figure

The pound posted gains of nearly two cents against the kiwi dollar yesterday as demand dulled for riskier assets following weak US data and lower equities.

• Kiwi was again under pressure as investors continued to take the opportunity to cash profits as risk appetite waned after the US 3Q GDP figure was revised downward.
  
• In addition, equity markets turned negative with US benchmark indexes opening with small losses, which supported a return to the US dollar, softening demand for the kiwi.
  
• The loss of risk appetite brought the sterling/kiwi price to a two week high back over 2.29, though a further reiteration of low US interest rates in the evening did see the New Zealand dollar trim its losses.
  
• In trading this morning, the pound has posted gains after the UK 3rd quarter GDP figure was revised upward.

Sterling posted gains vs the aussie yesterday but a bullish speech from an RBA official overnight has the aussie trading strongly today

The pound reversed its downward trend against the aussie, but closed someway from its intra-day high as investors started to sell the dollar towards the end of play.

• Risk appetite was soft during trading on the back of negative news from various parts of the global banking industry. In both China and Germany, banks were under pressure to raise funds, which dented demand for high-risk currencies.
  
• In addition, data showed that the US economy in the third quarter grew at a slower pace than previously estimated which reduced demand for higher-yielding aussie.
  
• Further adding to negative risk sentiment was a weaker-than-expected report on US home prices in September, which rose for the fifth straight month, but at a slower rate.
  
• In later trading though, the aussie pared its losses, finding support as a report from the US Fed reiterated the need to hold rates at their present levels.
  
• This morning aussie is broadly stronger following a speech from Deputy RBA Governor Ric Battellino, who said that, "with the economy having only recently entered a new upswing, it is reasonable to assume that we will see this growth extended for a few more years yet."

Euro enjoyed a late rally to post marginal gains against the dollar and is up over 1.50 today

Having held onto gains through most of the European and US sessions, the dollar slipped back late in the day to close marginally down on the euro.

• The greenback found support after data revealed the US economy had not expanded by as much as had been previously estimated, with its GDP figure revised downward to 2.8%.
  
• A wider trade deficit and lower nonresidential business investments contributed to the lower third-quarter GDP number.
  
• Risk appetite was also dented by concerns over the global banking industry. In China, there were reports that a number of banks would be forced to raise capital. In Germany, state-backed lender WestLB searched for funds to help unload toxic assets from its books.
  
• The euro recouped some of its losses though as a key measure of German business sentiment beat forecasts, triggering optimism the eurozone's biggest economy is recovering at a healthy rate.
  
• Additionally, a strong US consumer confidence survey figure encouraged investors to take up risk trades, buoying demand for the single currency.
  
• In the late evening, further pressure was mounted on the dollar after the Federal Reserve said it expected a slow recovery with high unemployment, affirming expectations it will keep rates low for some time.

US dollar moved higher against the pound yesterday, but is being broadly sold again this morning

The US dollar trimmed strong early gains against the pound after a Federal Reserve statement left a negative dollar tone in the market going into the close.

• Risk sentiment again seemed to be off the table in trading yesterday after the US 3rd quarter GDP figure was revised downward to show that the economy only expanded at a rate of 2.8%, down from a previously estimated 3.5%.
  
• The data showed a wider trade deficit and lower consumer spending than previously thought, which encouraged investors to drop riskier assets.
  
• In the UK, speaking to the parliament's Treasury Committee, BoE Governor Mervyn King said considerable uncertainty about the economic outlook remained and that it would still take a long time for the level of output to return to more normal levels.
  
• Analysts said the comments offered little new in terms of policy outlook for the economy, which kept the pound under pressure.
  
• In the evening though, the dollar came under pressure, capping its gains, after the minutes from the Fed's most recent meeting reiterated the need to maintain their low interest rate policy.
  
• Dollar selling has continued this morning, with the pound currently trading 0.75% higher, pushing the price back over $1.67.

Sterling edged lower against the euro yesterday, but has founds slight support in trading this morning

Having touched on twelve-day low against the euro in early trading, the pound recovered most of its losses to close the day just 0.1% lower at 1.1083.

• The single currency found early support after a strong reading of German business sentiment, which exceeded forecasts, instilled some optimism about the euro zone economy.
  
• The firmer than expected German sentiment survey offset worries over the banking sector brought on following reports that German regional bank WestLB was struggling to secure funding.
  
• The Bank of England's Treasury Select Committee remained cautious on the strength of the economic recovery yesterday saying that the UK economy still faces "profound challenges," fueling speculation the bank may extend asset purchases as the recession persists.
  
• The Bank's testimony offered little new insight into the outlook for monetary policy, which kept pressure on the UK currency.
  
• Market participants added that reports from ratings agencies focusing on the weakness of major banks around the world were also weighing on sterling, given the economy's dependence on financial services.
  
• This morning the pound has moved higher following the 0.1% upward revision of the UK's 3rd quarter GDP figure to -0.3%.