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.

Risk caution over the kiwi, rallies sterling

The pound has finally capped its losses against the kiwi as cautious investors suspect that the risk rally may have gone too far.
• Sterling initially fell further against the kiwi yesterday evening as the investment trend continued to favour riskier assets.
• However, a weaker-than-expected New Zealand trade balance figure released late last night saw investors return to caution, which capped the kiwi’s gains.
• A fall in Chinese stocks added to selling pressure on the kiwi, with investors cautious about the pace of New Zealand’s recovery.
• The pound is currently trading 0.07% up for the day, but with CBI Realised sales data to be released at 11:00BST, a positive reading could extend these gains.
• The New Zealand monthly building consents data is released today at 23:45BST, which will give investors a good insight into the current economic health of the economy.

Pound caps losses vs aussie

Sterling finally reversed its downward slide against the Australian dollar closing marginally up at 1.9589.

• The US economy suffered a minor setback yesterday after data was released revealing worse-than-expected core durable goods orders for July, which dulled investors risk appetite and hurt the higher risk currency.
  
• Additionally, the data encouraged investors to lock in profits made in aussie-denominated assets held last week, which allowed the pound to recover some of its losses.
  
• A fall of 1.5% in the Nikkei 225 index further hindered the Australian dollar due to the commodity driven nature of the currency.
  
• This morning however, the aussie recouped its value after a surprising jump in business investment last quarter suggested the economy is growing faster than expected, underpinning hopes for a rate hike later this year.

Greenback recovers early losses as risk erodes

Early gains for the single currency, following the positive Ifo survey, were swiftly recovered by the greenback to close the day at 1.4255.

• The euro initially hit the day’s high of 1.4351 against the dollar, after the German Ifo business survey notched up its strongest monthly gain since 1996.
  
• But these gains were swiftly erased as details of a US durable goods report for July were less upbeat than expected, eroding risk appetite in the market and sending investors running to the relative safety of the US dollar.
  
• As a key measure of business demand, the weak durable goods data reminded investors that the US economy still faces huge challenges as it tries to emerge from deep recession.
  
• The single currency was also hampered by a poor day’s trading in the European equity markets which, even after a late rally, saw both the FTSE and the DAX closing over half a percent down.
  
• This currency pairing is trading at a steady level this morning, as the markets wait for crucial economic data to emerge from the US later today.

Sterling slides further vs dollar

Sterling fell by nearly two cents, or 1.2%, at its lowest point yesterday as poor economic data from the US encouraged investors to dump the pound.

• A survey of new purchase orders for durable goods in the US revealed a figure slightly down on forecasts, dulling investors’ appetite for sterling as they retreated to the safer currency.
  
• This data was immediately levelled out by a stronger-than-forecast US homes sales figure, but it had a minimal selling effect on the dollar, with the pound eventually closing the day down at 1.6233.
  
• The pound also suffered from a slowdown in the recent bullish trend of European equities, with the FTSE100 ending up 0.54% down for the day, putting selling pressure on sterling.
  
• In trading so far this morning, the pound has slowed its rate of decline following stronger-than-forecast data emerging for UK house prices.
  
• Investors will be keenly anticipating the US Prelim quarterly GDP figure announced today at 13:30BST, with forecasters still predicting an economic retraction of 1.4% despite recent upbeat sentiment about US recovery.

Sterling continues longest decline vs euro since January

Another fall for sterling yesterday puts it into its longest decline against the single currency since January.

• The euro continued to advance yesterday following a stronger-than-forecast German Ifo business morale survey, which reinforced signs that Europe’s largest economy is recovering from recession.
  
• The pound also suffered as the yield on two-year government bonds fell to a record low, making short-term British debt less attractive than its eurozone counterpart.
  
• One analyst said yesterday that with BoE so cautious about keeping rates low and the Ifo so positive, it is hard for euro/sterling not to be pushed higher.
  
• Despite the pummelling that sterling has taken this month, some market participants said that the currency may be in for a correction next month, when many traders return from holidays and more economic data reflects improvements in the UK economy.
  
• A positive CBI retail sales figure, announced today at 11:00BST, could help to slow the pound’s decline, whilst in the eurozone investors will be listening in to the preliminary CPI figures from six German states, released throughout the day.