The kiwi has relinquished gains made yesterday, as confidence in the pound returns

A strong rise in risk sentiment saw the pound fall further against the New Zealand dollar yesterday, to close at 2.3592, down 1.0%.

• Sterling traded around the lows it hit a couple of weeks ago as rallying equity markets eased risk aversion and spurred demand for higher-yielding currencies.
  
• Commodity driven currencies were the real winners yesterday, as investors relinquished haven positions in search of a greater yield.
  
• Confidence in the New Zealand currency also remained high as investors speculate on an upbeat statement from the RBNZ later this week, whilst speculators remained wary of a possible dovish statement from the BofE on Thursday.
  
• The recent rise for the kiwi has actually become an issue for Governor Alan Bollard, who has expressed his discomfort with its surge stating that the high rate may hamper New Zealand’s export led recovery.

The pound has reversed its downward trend against the aussie today on rising European equities

The pound fell for a fourth consecutive day against the aussie yesterday, driven by a broad rise in risk sentiment.

• The Australian dollar hit its strongest level in thirteen years against the pound yesterday as improved investor sentiment was sparked by reassurances from the G20, who pledged to continue with policies aimed at supporting the global economy following a meeting in London over the weekend.
  
• Although there was not a big market reaction to the G20 meeting, part caused by the US Labor Day holiday, the outcome was certainly pro-risk appetite, which strengthened demand for the Australian currency, driving the pound down 1.9098, a 0.9% dip.
  
• The aussie was given an additional lift by the first rise in Australian job advertisements in 16 months, which increased speculation that the Reserve Bank of Australia may raise rates before the end of the year.
  
• In trading so far this morning, the aussie has pared its gains as investor appetite towards riskier assets was tamed as Asian stocks traded in the red.

The single currency as surpassed its previous monthly high today against a broadly weaker dollar

The single currency continued to gain ground against the dollar yesterday, spurred on by a rise in European equities.

• The single currency found support against a broader weaker dollar yesterday as bullish European stocks eased risk aversion, weakening haven currencies.
  
• The single currency also made ground, as German factory orders revealed a further rise in the strength of their manufacturing industry.
  
• Data showed that factory orders rose a stronger-than-expected 3.5% in July, but the reaction was relatively subdued with the euro trading steadily up around 0.3%.
  
• In trading this morning, the euro is continuing to consolidate its gains, nearing the highs of 1.44 it achieved at the end of August.
  
• German monthly production figures are released today at 11:00BST, which are predicted to follow yesterday’s data in supporting Germany’s recovery, whilst in the US there are no major announcements.

Sterling has reversed yesterday's losses against the dollar, gaining a cent in trading this morning

On the Labor Day holiday, the pound fell back to $1.6347 against the greenback despite a general rise in risk sentiment.

• The pound initially edged up further against the dollar yesterday as risk sentiment was supported by gains in the European equity markets.
  
• The G20 ministers over the weekend pledged to maintain monetary stimulus which, although this came as no surprise, it was nonetheless supportive of risk and generated a rally in the European equity markets.
  
• Gains were short-lived, however, as speculation of further easing by the Bank of England later this week prevented the pound capitalising on the rise in risk sentiment.
  
• Analysts noted that trading was choppy yesterday due to merger and acquisition speculation after Cadbury rejected a £10.2 billion take-over bid by US conglomerate Kraft Foods.
  
• Sterling however has reversed its losses this morning, already creeping up near the 1.64 level, as investors speculate on positive British manufacturing production data released today at 09:30BST.

Expectations of further monetary easing kept the pound low agains the euro yesterday

Investors were cautious of taking sterling positions yesterday, with the pound losing 0.5% against the single currency to close at 1.1404.

• Sterling relinquished its recent gains against the euro yesterday as speculation of further easing by the Bank of England later this week overshadowed the market.
  
• Analysts have noted that policy expectations will be the main driver of sterling this week, with the majority of forecasters expecting the rate to hold steady at a record low of 0.5%.
  
• The single currency was also assisted by a stronger-than-forecast factory orders figure in Germany which reaffirmed the strength of the manufacturing sector’s recovery in the eurozone’s largest economy.
  
• In trading this morning, the pound has started to curb its losses, edging marginally lower, but holding around the 1.14 level.
  
• In the UK today, production data is being released at 09:30BST, with analysts forecasting a rise of 0.3% in July, a reduced figure from the previous month.

Kiwi dollar pressed higher against the pound on Friday, and has reached last weeks record highs already this morning

The pound continued to lose ground on Friday, losing a further two cents to close at 2.3844.

• On Friday, a report showing that US employers shed fewer jobs in August than economists forecast, encouraged demand for higher-yielding assets, supporting demand for the kiwi.
  
• The kiwi was also supported by Asian stocks which continued to rally, building on Thursday’s biggest gains in six months.
  
• So far this morning, the kiwi has continued to trade higher, once again taking direction from Asian equities which, led by Chinese stocks, were broadly higher.
  
• Data today also showed that New Zealand wholesales fell 0.9% in the second quarter, the fourth consecutive quarterly fall and, which has prevented the pound from sliding too far, currently trading just 0.1% lower for the day.
  
• Additionally, the treasury said that New Zealand has emerged from recession, but warned that a high currency threatened the fragile, export led, economic recovery.

Aussie continues to strenghten against the pound as strong equities heighten risk sentiment

The Australian dollar posted further gains against the pound on Friday as risk aversion eased following US payroll data.

• Having traded relatively steadily on Friday morning, the aussie was able to post strong gains in the afternoon as investors were encouraged into the higher yielding currency following the release of the US non-farm payrolls.
  
• Although the data released was ambiguous due to the rise in overall unemployment, investors chose to focus on the brighter side of the data, which eased risk aversion and increased demand for the Australian currency.
  
• The aussie has continued to trade strongly this morning as firm Asian stocks supported bids for riskier currencies.
  
• An upbeat job ads report released this morning added to the overall positive note in the Australian markets with sterling currently trading 0.25% down for the day.
  
• Analysts have warned that as markets are shut in the US today, thin trade could exaggerate any moves in the Aussie later today.

Euro made strong gains vs the dollar on Friday; continues to do so today with the US markets on holiday

The euro made strong gains against the dollar on Friday as risk sentiment was supported by US payrolls data, with the pairing closing up at 1.4296.

• The single currency initially fell against the greenback on Friday, after the US jobs report showed that the unemployment rate rose to a 26-year high of 9.7%, discouraging risk appetite.
  
• However a report also showed that non-farm payrolls declined by 216K, in August, an improved figure from the 276K revised drop seen in July.
  
• Reaction to this news was relatively muted reaction, but the single currency was supported as investors began to digest the information and realise the positive signs.
  
• The US stock markets were also supported by the data which in turn helped the euro as investors were encouraged away from their safe haven.
  
• Some analysts have speculated that the strengthening of the greenback following positive payrolls data could mark a further step towards the changing relationship of the dollar to economic data and risk sentiment.
  
• There is no economic data released today in the US as markets are closed, whilst in the eurozone, monthly figures on German factory orders are published at 09:30BST.

Despite mixed US non-farm payrolls data on Firday, sterling pushed higher against the dollar

Traders remained positive following mixed US payrolls data, which allowed the pound to climb to a high of $1.6409 on Friday before eventually closing at $1.6390.

• Early trading on Friday remained steady, with the pound edging up slightly against the dollar on strong European equities, as traders braced for important US employment figures.
  
• The data in the afternoon proved ambiguous though as traders tried to analyse the dual factors of improved non-farm payrolls, but greater overall unemployment, which rose to 9.7%.
  
• Following the news the pound did drop sharply from a daily high of 1.6386 but its losses were pared around the 1.63 level and it recovered to trade at pre non-farm levels as demand for the safety of the dollar was surprisingly limited.
  
• Analysts said that the worse-than-forecast rise in unemployment could prove a burden on household consumption and spell a very gradual recovery in the US, which may support the dollar value over the medium-term.
  
• There is no trading today on the US markets as it is their Labor Day, so movement is likely to be limited with the pair currently holding steady around the 1.64 level.

Sterling relinquishes Friday's gains against the euro

The pound climbed for the third consecutive day against the euro on Friday, supported by strong equities, to close at 1.1462, its highest point in over a week.

• Trading was particularly tight on Friday morning as investors were reluctant to put on big positions ahead of the August non-farm payrolls data in the US.
  
• However the data proved to be a mixed bag and had little impact on the pound / euro pairing, which continued to trade marginally in sterling’s favour throughout the day.
  
• The pound was supported though by a strong showing in the equity markets, which have held significant sway over the strength of the pound in recent weeks.
  
• Trading this morning has seen the pound slip from Friday’s highs, currently trading around 0.3% lower, with investors remaining wary of the UK’s recovery, following the words of the OECD that forecast a slower recover for Britain.
  
• In the eurozone today, data is released on Germany factory orders at 11:00BST, with analysts actually forecasting a 2.5% reduction from last month, whilst in the UK there are no major economic announcements.