The kiwi made strong gains against the pound at the end of last week but has pared its gains this morning

Sterling slipped back nearly two cents against the kiwi dollar as risk appetite was upheld by strong US and Asian equities.

• Having traded sideways during the European session on Friday, the kiwi made gains as the US equity markets opened on a positive note, despite weaker than expected trade data, which spurred a modest return to risk appetite.
  
• In trading this morning the kiwi is slightly lower after data showed little inflationary pressure in the economy, supporting the central bank's view that rates will be on hold until the second half of 2010.
  
• The New Zealand producer price index fell more than expected in the third quarter, while activity in the services sector retreated for the first time in four months in October, reflecting a patchy recovery from the recession.

Higher equities and gold prices kept the aussie trading strongly on Friday

The pound was down 0.4% against the aussie dollar as stronger US equities maintained a level of risk appetite, which supported the higher-yield currency.

• In addition to stronger stocks, the aussie also found support from a continued rise in the price of gold as investors looked to diversify their trading portfolios in order to hedge against a weak US dollar.
  
• Gold climbed to an all-time high as investors stepped up purchases of the precious metal on speculation that the dollar will extend its decline.
  
• However, the world's top mining companies have warned today that global production of gold is likely to resume a long-term decline in coming years, which may prove a burden to the aussie in the future.
  
• In trading this morning, the pair are holding steady, with investors awaiting comments from Obama's visit to China where the valuation of the Chinese yuan is being discussed.
  
• Given the close trading relation between China and Australia, the strength of the yuan has strong influence on that of the aussie.

The euro traded higher than the dollar at the end of last week following positive EU growth data

The single currency was up half a cent against the dollar on Friday, recovering some of its mid-week losses as investors chose to take profits in the greenback.

• The dollar lost ground against most major counterparts on Friday for the first day in three, with strategists attributing the modest weakness to investors taking profits on the greenback's recent bounce.
  
• In the eurozone, data revealed that German GDP expanded 0.7% in the third quarter and French growth was at 0.3%. Although these figures fell short of market expectations, they confirmed continued economic expansion, which lent support to the euro.
  
• The greenback briefly extended losses after data showed that the US trade deficit widened more than forecast, to $36.5 billion in September, enforcing sentiment that rates would remain low for some time.
  
• The dollar also stayed lower as stocks held onto gains after the Reuters/University of Michigan index showed consumer sentiment unexpectedly declined in early November to its weakest level in three months.
  
• The single currency has continued to climb higher this morning, currently up half a percent to regain its positions just below $1.50.

Sterling posted gains against the dollar on Friday and is continuing to make ground this morning

The pound was a cent up against the dollar on Friday as market participants took profits on the greenback's modest bounce earlier in the week.

• The greenback extended losses after data showed that the US trade deficit widened more than forecast, to $36.5 billion in September, and that import prices rose 0.7% last month.
  
• Strategists noted that while trade is not usually a prime driver of currencies, the combination of rising imbalances and extremely low rates is typically a US dollar negative.
  
• The pound rose as a planned merger of British Airways Plc and Iberia Airlines sent the UK's stock market slightly higher and spurred speculation the economy is improving, boosting demand for the currency.
  
• However, sterling buying is commonly seen as market strategy when the price drops to $1.65 rather than speculative buying, as investors are keen to pick up sterling as it falls to cheaper levels.
  
• In trading this morning, the pound has pushed through resistance at $1.67, currently up over half a cent as rhetoric over China's yuan currency policy increased.
  
• Investors will be watching US retail sales data for October released at 13:30, which, if it follows forecasts, could boost risk appetite.

Sterling made its way back towards 1.12 on Friday but has edged down in trading this morning

Sterling enjoyed a slight rally at the end of last week, once again briefly stretching up over 1.12 against the single currency before closing at 1.1188, up 0.2% on the day.

• Sterling recovered some of its two-week losses against the euro on Friday as traders closed short positions in the UK currency ahead of the weekend.
  
• The single currency found itself on the back foot after data showed that the eurozone returned to growth in the third quarter, but at a slower pace than expected.
  
• The euro-zone economy registered quarter-over-quarter growth of 0.4%. The figure fell short of the 0.6% increase forecast by economists, largely due to a weaker-than-expected outcome turned in by both France and Germany, the region's two largest economies.
  
• The pound also found support as a planned merger between British Airways and the Spanish Iberia airline spurred speculation that the economy is improving.
  
• Analysts noted that the slight gain for sterling on Friday showed an unwinding of pessimism that followed the inflation report, although the currency would remain volatile because of the continued uncertainty on the British monetary policy.

Concern over the strength of the global recovery dulled demand for the kiwi yesterday

Sterling was up nearly two cents, or 0.9% against the kiwi, as risky-assets took a broad downturn with the pair closing up at 2.2613.

• A drop in European equities was mirrored by the major indices in the US and Asia, which also closed in the red, discouraging demand for higher-yielding kiwi.
  
• The New Zealand dollar also lost ground to the pound after Chinese Premier Wen Jiabao said the world economy faces a bumpy recovery, discouraging risk demand.
  
• "The world faces a gradual and uneven recovery from the worst financial crisis since the Great Depression," China's Wen said in a televised speech in Beijing.
  
• The kiwi is continuing to lose ground in trading this morning as investors turn to profit taking ahead of the weekend and as policymakers warn that economic recovery is still fragile.

The waning of risk appetite and slight profit taking enabled the pound to climb against the aussie

The pound reversed a run of losses yesterday, advancing 0.7% on the aussie, as demand for the riskier currency was dulled as risk appetite waned.

• The aussie retreated from two-week highs as the rally in global stocks markets stumbled slightly, reducing investors' willingness to take on risky trades.
  
• The loss of risk gave traders an opportunity to cash in on aussie strength and take profits ahead of the week, which enabled the pound to close the day up at 1.7944.
  
• Analysts noted that market participants were unwilling to take up positions in risky assets ahead of statements from policymakers in the build up to this weekend's APEC Summit and next week's US-China Summit.
  
• In trading this morning the pair are trading sideways, holding around the overnight closing price. However, analysts are expecting the aussie to remain strong over the longer term with high gold prices and a weak US dollar supporting demand for the Australian currency.

USD found support in trading yesterday from weaker stocks and bullish comments from a US policymaker

The single currency fell sharply against the dollar, losing well over a cent as investors retreated from risk activity on lower equities.

• The dollar held the line on gains against major counterparts, getting a boost as investors turned to safe-haven assets as stocks on Wall Street appeared unable to pass through key resistance levels.
  
• The dollar advance was also bolstered by a report showing initial US weekly jobless claims were lower than expected.
  
• US initial jobless claims decreased to 502,000 in the week ended Nov. 7, from a revised 514,000 in the previous week, the Labor Department reported.
  
• One analyst also cited the dollar's strength as a result of the position-driven market. People went short on the dollar on Wednesday, and after stops losses were triggered around 1.50, traders bought it back after.
  
• In addition, the dollar was supported after US Treasury Secretary Timothy Geithner said the government's borrowing needs in the future would be substantially less than expected.

Stumbling equties enabled the dollar to make hesitant gains yesterday

The pound edged down against the US dollar as weaker equities slowed demand for risk appetite.

• In early trading, sterling fell to a one-week low against the dollar as investors absorbed Bank of England chief Mervyn King's comments from Wednesday that left the door open to more asset purchases to keep monetary policy loose.
  
• The inability of the Dow Jones Industrial Average to break through resistance at the 10,300 level provided the dollar with some modest relief, but analysts cautioned that a "much weaker Dow" would be needed for there to be a significant dollar rebound.
  
• The US Labor Department also reported yesterday that initial state jobless benefit claims fell to 502,000 in the latest week from a revised 514,000 in the prior week. The consensus forecast was for initial claims of 510,000.
  
• In addition, the dollar found slight support after Timothy Geithner, US Secretary of Treasury said that "we are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system."
  
• Investors are now shifting their focus to a meeting of Asia-Pacific nations and other Asian regional issues, including a U.S. state visit to China next week.

The pound recovered in trading yesterday and has continued to post gains against the euro this morning

The pound rallied strongly against a broadly weaker euro yesterday, recouping losses incurred on Tuesday to close the day back up at 1.1166.

• The euro came under slight pressure after data that showed industrial production in the 16-nation euro zone rose 0.3% in September. Compared to the same month last year, output was down 12.9%.
  
• The euro also suffered heavily against the US dollar and traders cited that heavy sell off as cause for the single-currency's weakness against the pound.
  
• Analysts noted that overall action in currency markets remained largely driven by technical considerations yesterday amid a lack of major economic data to drive foreign-exchange trading.
  
• In trading this morning, the euro has come under further pressure, after both the Germany and French economies undershot their growth forecasts for the third quarter.
  
• It has been revealed that in the three months through September, German GDP was 0.7%, marginally below the 0.8% prediction. Meanwhile, French GDP for the same period was at 0.3%, some way below the 0.6% forecast.
  
• The pair are currently hovering just above 1.12