Sterling has rallied against the kiwi today, as investor sentiment for the New Zealand dollar weakened

The pound continued to slide against the kiwi on Friday, closing at 2.3553, as strong Chinese data supported demand for the higher-yielding currency.

• The kiwi has fallen sharply this morning though as speculators reduced their risk activity following a retreat in Asian markets, which dented demand for commodity driven currencies.
  
• The New Zealand dollar also suffered after soft data revealed that the country’s retail sales dipped unexpectedly in July, and from a broadly rebounding US dollar, which was sent higher by investors covering short positions.
  
• The sales data showed a dip of 0.5%, against a predicted rise of 0.5%, which showed that consumers remain cautious about New Zealand’s economic recovery.
  
• New Zealand’s data calendar is relatively light for the rest of the week, leaving the kiwi likely to follow broader market events and direction.

Following a positive start, the pound has lost value against the higher-yeilding aussie

The pound continued to climb against the aussie currency on Friday, closing up at 1.9307, as investment sentiment in the pound remained strong.

• Earlier this morning, the pound reached a weekly high of 1.9476, as higher-yielding currencies suffered a broad sell off.
  
• A fall in metal and crude oil prices weighed heavily on the Australian dollar. US crude for October delivery fell to around $63.13 a barrel while copper was lower in Asian trade.
  
• However, the pound has fallen from early highs, with the aussie currently trading around 0.3% higher for the day.
  
• Looking ahead, investors will focus on the minutes of the Reserve Bank of Australia’s September policy meeting which will be released on Tuesday.
  
• Investors have recently pared bets of a rate increase in Australia in coming months after surprisingly soft retail sales data and a weak jobs report.

Dollar trading slightly higher against the euro today, as demand returns to the haven currency

The dollar pulled back from four straight days of losses against the single currency on Friday, as investors decided to book profits before the weekend, with the pairing closing at 1.4568.

• The dollar continued to descend lower on Friday morning after a string of Chinese data came in better than expected, adding to global recovery hopes, prompting investors to keep transferring funds to riskier and growth linked currencies.
  
• However, a survey showed that consumer sentiment in the US was improving, which sent the euro down to an intra-day low of 1.4557, as investors took the opportunity to book profits following a bearish dollar week.
  
• The single currency has continued to lose value this morning, partly as a 2.4% drop in Tokyo’s Nikkei share average prompted Japanese investors to trim long positions in higher-yielding currencies previously built on hopes for global recovery.
  
• However analysts believe that the dollar’s overall downward trend is still unchanged, and that what we are seeing at the moment is little more than a technical rebound.

Having gained on Fridat, the pound has fallen back today against a broadly stronger US dollar

The pound continued to rally against the dollar on Friday, reaching a fresh monthly high of 1.6740, before relinquishing its gains as investors cashed in on profits made.

• Sterling continued to be supported on Friday by the view that the Bank of England’s decision to keep monetary policy unchanged suggests the UK economy may be stabilising.
  
• Demand for sterling remained intact after U.K. producer prices increased for a sixth month in August with a reading of 2.2%, adding to signs the recession may be easing.
  
• Sterling also drew strength from a small rise in weekly UK department store sales announced on Friday, which added to signs domestic consumer demand may be recovering.
  
• However later in the day, the pound fell prey to profit-taking as investors felt they had gone slightly long, which brought it back to close at 1.6657.
  
• The dollar has rebounded over a cent in trading this morning (0.7%) as traders felt the currency had been oversold, though analysts are saying that this is only a temporary blip in the greenback’s downward trend.

Sterling is dropping back today against the euro as equities fall

The pound edged up further against the single currency on Friday, but has lost its gains today following weaker equities.

• On Friday morning, investor confidence remained high following Thursday’s BoE decision to leave QE unchanged, which added economic stability.
  
• Equity markets also continued to rally, with the FTSE gaining another 0.5% to close up over 5000 pts, supporting the pound’s recovery.
  
• Additionally, the PPI index rose by 2.2% in August, far more than expected, which encouraged hopes that the recovery is strengthening.
  
• However, sterling’s advance was capped, with the price unable to reach above 1.1461, and trading remained tightly bounded throughout the day in a range between 1.1420 and 1.1440.
  
• In trading today, sterling has dipped back below 1.1400 as investors check their risk activity as equities markets have fallen.

Strenghtening risk appetite for riskier assets, supports demand for the kiwi

Having advanced strongly following the BoE’s statement yesterday, the pound fell sharply against the kiwi as investors chose to cash in on profits.

• Demand for the pound strengthened yesterday as the UK economy was given a level of stability following the BoE’s decision to keep both interest rates and its asset purchasing scheme unchanged.
  
• In the wake of this news, the pound made strong gains against the kiwi, briefly reaching 2.3906.
  
• However, at this point, investors, speculating that the climb against a strong New Zealand dollar could not be sustained, chose to cash in on short profits made, which sent the pound tumbling back down to a close of 2.3644, a fall of 0.6% for the day.
  
• This morning the pound, having suffered a broad sell off, briefly recovered back over 2.3700, but has since slid further as demand for higher-yielging currencies strengthens amid a recovering global economy.

A strong aussie dollar fails to regain losses incurred against the pound

The pound continued to advance steadily against the Australian dollar yesterday, buoyed by renewed confidence in the UK economy.

• The pound advanced nearly a cent (0.5%) against the aussie yesterday, as investor demand returned to the UK currency as the BoE left both interest rates and QE unchanged.
  
• Having suffered recently from a lack of confidence in the economy, sterling was given firm support as the BoE’s decision steadied investor concerns about the strength of the UK’s recovery.
  
• The aussie also continued to suffer throughout the day from an increase in monthly unemployment, and soft retail sales for July, which undermined hopes for an early rise in interest rates.
  
• Robust Chinese economic data earlier this morning, which has boosted commodity linked currencies against the dollar, was unable to prevent the aussie from sliding further against the pound, which is currently trading another 0.5% up for the day.

Euro advances further aginast a broadly weakened dollar

A choppy day in this currency pairing eventually saw the euro advance 0.15%, its fifth straight day of gains against the greenback.

• The single currency was initially able to make strong gains against the greenback yesterday, hitting a new high for 2009 of 1.4611, after a report showed a drop in the number of US jobless claims last week.
  
• The improvement to 550K claims, supported investors’ recent demand for riskier investment in stocks, commodities, and currencies.
  
• However, data also showed that the US trade deficit for July widened by 16.3% to $32.0 billion, the biggest month-on-month increase since 1999, which dented risk sentiment and sent the single currency back below 1.4600.
  
• Early rises in European stocks also faded in the afternoon which put further selling pressure on risky assets, with the euro finally closing down at 1.4579.
  
• Better-than-expected Chinese data last night has put further selling pressure on the dollar, with the single currency continuing to advance this morning.
  
• There is a consumer sentiment survey in the US today at 14:55BST which will give investors a good indicator of the current level of confidence in the US economy.

Sustained selling pressure on the dollar supports demand for the pound

Sterling continued to gain yet further ground against the greenback yesterday, advancing another 0.6% to close the day at $1.6649.

• In morning trading yesterday, European indices fell back to trade in the red, with the FTSE heading back below 5000 points, which unnerved investors and put selling pressure on the pound.
  
• At midday though, the BoE announced that interest rates would remain steady at 0.5% and that the asset-purchasing programme would not be extended, as some had predicted, which enabled the pound to hit its highest point against the dollar since August 10 th, at 1.6684.
  
• The pound was also supported by a rise in risk appetite as US weekly employment change figures continued to improve.
  
• Earlier this morning, a raft of positive data emerged from China, adding to hopes of a global recovery, prompting investors to keep shifting funds into riskier assets, and enabling the pound to extend its monthly high to over $1.67.
  
• Light profit taking however has capped the pound's advances, with the pair currently trading around 1.6700.

Pound continues to rally as BoE returns a level of confidence to the economy

The pound was able to reverse a three-day slide against the single currency yesterday, as investor confidence was buoyed by the BoE’s decision not to extend the QE programme.

• Trading was strictly range bound yesterday morning, as investors were cautious of taking short positions ahead of the Bank of England rate decision.
  
• In the afternoon however, the pound advanced as the BoE left interest rates on hold at 0.5% and left its asset-purchase budget unchanged £175 billion.
  
• The pound recovered to trade well above the 1.14 level as improved investor sentiment toward the Britain's economic recovery strengthened demand for sterling.
  
• Weakening equities did cap the pound’s gains though to 0.45%, closing the day at 1.1416.