Sterling loses 2.6% vs kiwi in a week

Sterling fell for a sixth consecutive day against the kiwi yesterday, having now lost nearly 2.6% of its value since early last week.

• The New Zealand dollar stayed strong overnight after volatile Chinese stocks moved higher.
  
• The higher-yielding and commodity-linked currencies, such as the kiwi, have gained ground with Shanghai shares recently, with many eyes on China playing a central role in helping to pull the global economy out of recession.
  
• In trading so far this morning, the pound has already dipped over a cent and half, but analysts say that high-yielding currencies will need further strong data supporting expectations of economic recovery in order to push higher.
  
• New Zealand’s Trade Balance figure for July will be released today at 23:45BST, with forecasters predicting a much improved figure from June.

Sterling slows its slide vs the aussie

The pound began to cap its downward spiral against the aussie yesterday, falling just 0.04% to close the day at 1.9555.

• Positive economic data from the US maintained the feeling that the global economy is on the mend with investors buying into higher-yielding “riskier” currencies at sterling’s expense.
  
• Better-than-expected Australian construction work spending supported the aussie’s gains and bodes well for next week’s second-quarter gross domestic product reading.
  
• However, the Australian currency held relatively steady overnight, hovering near its 13-year high against sterling.
  
• Its failure to climb higher has some worried that the aussie may be increasingly over-bought against the pound with a rally in riskier assets possibly slowing.

Euro pars recent losses vs the dollar

The single currency slowed its descent against the greenback yesterday after a positive US consumer confidence rating spurred a slight return for “riskier” investment.

• Reports showing a rise in US consumer confidence and an increase in prices for US homes for a second consecutive month in June boosted risk sentiment, assisting the euro.
  
• In addition, the appointment of Ben Bernanke as chairman of the Fed to a second term contributed to a rally in stocks, helping to stimulate demand for the single currency.
  
• Analysts say that Bernanke’s appointment should prove supportive of risk, and therefore benefit the euro, as it will likely ensure that the current monetary policy stance remains stable.
  
• The euro has recovered its losses from the past couple of days this morning as investors continue to digest yesterday’s data.
  
• The euro could further its gains today with the Ifo Institute’s report on German business confidence, due at 09:00BST, forecast to rise for a fifth consecutive month, adding to evidence that the recession in the eurozone is abating

Pound continues to tumble against the dollar

Sterling tumbled for a fifth consecutive day against the greenback yesterday losing a further 0.4% to close the day at $1.6349.

• Sterling briefly rebounded against the dollar yesterday following an afternoon recovery in global stock markets, but the pound was unable to hold its value.
  
• As stock prices continued to rise, the pound failed to post gains, which strengthened the argument that investors are now beginning to take long positions in the dollar.
  
• Elsewhere, a better-than-forecast consumer confidence rating released in the US yesterday did not prompt selling pressure on the greenback, with the pound losing further ground following the announcement.
  
• Data for both the Core Durable Goods Orders and New Home Sales in the US is released today at 13:30 and 15:00BST respectively. There are no major economic announcements in the UK.

Sterling hits 11-week low of 1.1386 vs euro

Sterling hit a 10-week low of 1.1410 against the single currency yesterday, as investors remained cautious of the risks inherent in the current UK economy.

• A choppy trading session in the stock market yesterday eventually saw the FTSE closing up at 4916.8 (0.42%) but this failed to stimulate demand for the sterling which continued to lose ground against the euro.
  
• Indeed, as global equity prices rose, it was the euro which benefitted, with investor sentiment still acknowledging the positive economic figures emerging from the 16-country region.
  
• The pound also lost value on speculation that a UK report later this week will reveal that house prices rose at a slower rate in August, supporting the case for the BoE to keep borrowing costs low.
  
• So far this morning, investors have continued to dump the UK currency after the yield on the two-year gilt hit its lowest ever level.
  
• In the eurozone today the results of the German Ifo Business Climate survey are released at 09:00BST, which could have a significant impact on the currency markets

Bernanke for second term appointment

US President Barack Obama will nominate Ben Bernanke to a second term as chairman of the Fed today, seeking to retain his services in steering the world’s largest economy out of its deepest downturn since the 1930s. Bernanke’s appointment though will need to be confirmed by the Senate where he has faced criticism from certain lawmakers who feel that his policies of lowering the interest rates to near zero and flooding the financial markets with over a trillion dollars have been an over-extension of Fed support that will be difficult to unwind, threatening future inflation. However, most investors have given Bernanke, whose current term expires on January 31st 2010, high marks and widely anticipated his reappointment.

Sterling continues to sink lower vs kiwi dollar

Sterling continued to sink lower against the kiwi yesterday as investors’ risk appetite was spurred on by bullish equity markets.

• The pound fell 1.4% to a midday low of 2.3836 against the New Zealand currency on Monday as strong European stock markets enhanced demand for the higher yield currency.
  
• Sterling did recover some if losses in the evening but still closed the day below the 2.40 mark.
  
• The kiwi has continued to push higher against this morning following another improved inflation figure of 2.3%.
  
• The FTSE 100 has also had a poor start day, losing nearly 0.5% in early trading which has put further selling pressure on the pound

Sterling plummets to 13-year low vs aussie dollar

Sterling plummeted to a thirteen-year low of 1.9503 against the aussie yesterday as investors were encouraged into high risk currencies.

• The pound has fallen by 2.2% in just four days against the Australian dollar as risk sentiment was buoyed by strengthening global equity prices, many of which hit their highest points of the year yesterday.
  
• However, during Asian trading hours the Australian dollar dipped as struggling stocks curbed demand for riskier currencies, with both the Nikkei 225 and the Shanghai Composite falling.
  
• One analyst has said that UK financials continue to outperform Australian resource stocks, which could point to near term gains for sterling against the aussie.
  
• In trading so far this morning, the pound has begun to cap some of its sharp losses as investors continue to recoil from weak Asian stock prices.

USD claws back losses vs euro

The single currency capped its gains from last week against the greenback yesterday, closing the day marginally down at 1.4302.

• The greenback clawed back losses against the single currency yesterday as investors took profits from four days of gains following a raft of positive economic data emerging from the eurozone.
  
• Having initially fallen in early trading, the single currency pared some of its losses against the greenback on Monday after eurozone industrial orders came in much higher than expected.
  
• Eurozone industrial orders rose 3.1% in June from the previous month, up much more than the 1.5% gain that had been forecast.
  
• In trading this morning, the dollar has continued to recover its losses following a lacklustre day on Wall Street that dulled risk sentiment.
  
• The Standard & Poor’s Case/Shiller report on US house prices for June is due for release at 14:00BST, as is a report on US consumer confidence an hour later. Both will be watched for clues about the economic recovery.

Light data day causes pound to weaken vs. USD

In a day devoid of any major economic data releases, the pound struggled to hold its value against the greenback yesterday, eventually losing nearly a cent to close at $1.6415.

• Despite the continued growth in global stock prices, the pound failed to post gains against the greenback, with analysts saying that sterling would remain under broad selling pressure in the short-term on the view that the BoE is delving deeper into quantitative easing than other central banks.
  
• The dollar, which usually declines when risk sentiment picks up, gained significant ground against the pound, which has led some analysts to suggest that risk reward is gradually moving in favour of long dollar positions on expectations for a stronger US recovery.
  
• The dollar’s resistance also comes as investors shy away from bold risk taking activity before a week of important economic data releases.
  
• US consumer confidence data, released today at 15:00BST, will give analysts a further indicator into current investor behaviour.