Aussie trading remains steady today as investors await important US data this afternoon

Sterling continued to fall against the aussie, moving further away from gains made on Monday, to close down 0.4% at 1.9419.

• A choppy day in the European equity markets saw sterling relinquish early gains as stocks fell into the red in the afternoon.
  
• The aussie took a boost, however, from a rally in Asian stocks which boosted risk appetite for the higher-yielding currency.
  
• The Australian currency was prevented though from moving too high, as investors remained cautious of the RBA’s recent dovish remarks about the economic recovery.
  
• In trading so far this morning, the aussie has started to curb yesterday’s gains, with the pair currently trading steady near yesterday’s closing price.
  
• Analysts say that trading is likely to stay subdued this morning as investors await data on the US payrolls, released at 13:30 BST later today.

Single currency lost early gains yesterday following the ECB statement

The single currency eased off from strong early gains as the ECB made tepid comments about the eurozone’s recovery, stoking risk aversion.

• The single currency trimmed early gains against the greenback yesterday, as the ECB announced that it was not going to change the current 1.00% interest rate.
  
• Jean-Claude Trichet’s comment that the interest rate in the September one-year tender would remain at one percent, dampened demand for the single-currency.
  
• On releasing the news, the euro fell back from its high of 1.4346 to close the day at 1.4250.
  
• The euro also suffered as early gains in the equity markets were lost in the afternoon, diminishing risk sentiment and sending investors back to haven positions.
  
• Important information about US unemployment is released today at 13:30BST, with analysts suspecting that the overall rate will continue to rise slightly, dampening hopes of a quick recovery.
  
• The G20 also convene for their first meeting today and their statements are likely to have a significant impact on the currency markets.

Pound continues to advance against the greenback

Strong data emerging from the UK yesterday supported the pound as risk aversion eased, lifting sterling to a close $1.6316.

• The pound advanced further against the dollar yesterday as economic data showed the UK services sector grew more rapidly last month than had been anticipated.
  
• Waning risk aversion as British and European shares held their value in morning trading, also supported the pound.
  
• In the afternoon however, stock indices descended into the red, causing the pound to par its gains, falling from a six-day high of 1.6412.
  
• Questions remain about how far the pound can continue to appreciate with concerns that the UK will maintain an extremely accommodative monetary policy.
  
• The pound has continued to post marginal gains against the greenback in early trading, as investors anticipate an improved monthly non-farm employment change, data about which is released at 13:30BST.

Positive services sector data in the UK, encouraged demand for sterling

The pound continued to show strength against the euro yesterday, posting gains of 0.4% to close at 1.1446.

• Sterling continued to increase its one-week high against the single currency yesterday after a survey of the UK services sector raised hopes that the country’s economy could return to growth in the third quarter.
  
• The UK purchasing managers’ index showed the service sector expanded at a faster rate in August, with the figure coming in at 54.1 versus 53.2 in July. This was the strongest reading since Sept 2007 and was marginally above the forecast of 53.9.
  
• Additionally, firms were also at their most upbeat for two years about their prospects, reinforcing optimism about economic recovery.
  
• Sterling also benefitted from the comments of the President of the ECB, Jean-Claude Trichet, who spoke of a “gradual” and “uneven” recovery and said that the interest rates were likely to remain at 1.0% for the next twelve months.
  
• In trading this morning, the pound has capped its gains against the single currency, with the pound currently trading marginally below yesterday’s closing price.

Sterling relinquishes gains posted yesterday vs kiwi as risk aversion abates

The pound continued to post strong gains against the New Zealand currency yesterday, regaining another 1.0% to close at 2.4157.

• Equity markets continued to trade in the red yesterday which put selling pressure on “riskier” assets, driving the kiwi lower.
  
• Additionally, data in the US revealed that job losses were still high, far more than had been expected, with the ADP non-farm employment change producing a figure of 298K for August, which further hindered the kiwi’s progress.
  
• In the UK, an improved figure for conditions in the construction industry brought relief from a string of negative economic data, encouraging demand for the pound.
  
• However this morning sterling has started to relinquish its gains part due to a rebound in Chinese shares that eased aversion to riskier, higher-yielding currencies.

Sterling capped it gains vs aussie following 0.6% GDP growth rate

The Australian dollar started to reclaim its losses yesterday following a positive second quarter GDP figure.

• Demand increased for the aussie yesterday following a better-than-forecast 0.6% quarterly growth rate which buoyed investor sentiment as it suggested that interest rates could still rise later this year.
  
• However, the aussie’s gains were capped after US stocks fell for the fourth day, with the pound closing down just half a cent at 1.9506.
  
• In trading this morning the pound has continued to lose ground with investors seemingly unnerved by Australia’s worse-than-expected trade balance figure, which was a full billion dollars further in the red in August than in July.
  
• The riskier aussie dollar was also supported by a rally in Chinese equities during eastern trading, with the Shanghai Composite closing up nearly 4.0%, which encouraged investor demand.

Tentatively positive US data enabled the euro to make marginal gains vs US dollar

The single currency rallied against the greenback yesterday to close the day up 0.3% at 1.4262.

• An overall chill in risk demand kept the euro near a two-week low against the dollar yesterday morning, with figures confirming a 0.1% quarterly contraction in the eurozone going relatively unnoticed in early trading.
  
• In the afternoon however, data emerged revealing a decrease in US crude oil inventories, raising the price of oil and putting selling pressure on the dollar.
  
• Additionally, the US saw tentatively positive data from factory orders and non-farm productivity, but analysts maintained that nervousness amongst traders prevented the euro from achieving stronger gains.
  
• In trading this morning, the single currency has continued to rise as European equity markets open marginally higher.
  
• The ECB will be releasing their latest interest rate decision at 12:45BST today which is widely forecast to remain at 1.00%, whilst in the US there are unemployment claimant figures due at 13:30BST.

The pound makes up over a cent vs the dollar on rising oil prices

Sterling posted gains of over a cent against the greenback yesterday as rising oil prices weakened the dollar.

• Data showed that the level of US crude oil inventories fell last week, which weakened the dollar as prices rose, enabling the pound to regain losses made on Tuesday.
  
• Additionally, the pound traded strongly on the back of improved construction sector data despite weaker global equities, which remained under pressure yesterday as concern lingered that the summer rally on world stock markets had proceeded too quickly.
  
• Sterling strengthened further in the afternoon, having hit a 1.6115 intra-week low early on, as the US non-farm productivity revised figure posted the largest increase since 2003.
  
• The 6.6% reading was revised up from 6.4% encouraging investors to leave the safety of the dollar, to close the day at 1.6258.
  
• In trading so far this morning, the pound has continued to gain, already surpassing the 1.63 mark.
  
• In the US today, forecasters are predicting a slight reduction in employment claims, with data being released at 13:30BST. US non-manufacturing PMI are also released at 15:00BST.

Sterling makes inroads into losses vs euro

Sterling rebounded yesterday following improved construction industry data, closing the day up 0.35% at 1.1398.

• Sterling rose yesterday, clawing back from recent losses and hitting a week-high of 1.1427 against the euro as investors covered short positions in the pound following its broad slide in past weeks.
  
• Additionally, a positive UK construction industry figure gave relief from a string of poor data emerging from the economy and helped the pound move further away from recent 10-week lows.
  
• The reading of 47.7 for August was improved from last month but still below the predicted level of 48.1.
  
• In trading this morning, the pound has continued to make marginal gains against the single currency, consolidating its position above the 1.14 mark.
  
• In the UK today data is released at 9:30BST on the services industry which is forecast to continue expanding for the fourth consecutive month, whilst in the eurozone, the ECB is releasing their interest rate decision at 12:45BST.

The pound posted strong gains vs kiwi on the back of rising risk aversion

Sterling hit a 6-day high against the kiwi yesterday as a sharp spike in risk aversion hurt sentiment toward the higher-yielding currency.

• Sterling initially fell by another half cent against the kiwi yesterday following surprisingly weak economic data emerging from the UK.
  
• However, the pound recovered its losses in the afternoon to close at 2.3926, up 0.7%, as investors sold off riskier currencies in light of falling global stock prices.
  
• Leading stock indices in Europe and the US fell by nearly 2% as traders withdrew from risk activity sparking concern over the pace of the global economic recovery.
  
• Analysts said that there was little substance to cause the risk aversion and that it was more the psychology of the market deciding to turn.
  
• In trading this morning, the kiwi has pared its losses, with the pairing now trading 0.2% lower than yesterday’s close.