Kiwi is trading strongly on the back of an upbeat rate statement from the RBNZ

The New Zealand dollar made strong gains yesterday, lifted by the prospect of the removal of monetary stimulus measures from the middle of 2010.

• The kiwi gained a further 1.2% on the poundafter the RBNZ, which as expected left interest rates on hold at 2.5%, said in its accompanying statement that if the economy continued to recover, conditions may support the removal of monetary stimulus "around the middle of 2010."
  
• Striking a hawkish tone at its policy meeting, the Reserve Bank of New Zealand signalled that it could follow other commodity producers such as Norway and Australia, and move to raise interest rates as early as next April.
  
• The New Zealand dollar was also given further support as Alan Bollard, RBNZ governor, indicated that he was less worried about the strength of the currency.
  
• In this morning's session the pound has pared its losses, recovering over a cent to bring the price back over 2.24.

Aussie continuing to trade strongly against a broadly weaker sterling

The aussie enjoyed another strong run yesterday, posting gains of 0.75% against the pound as investors bet on further interest rate rises in Australia.

• Strong employment data was a further boost to the pace of the Australian recovery and raised expectations that the RBA would move to increase rates at the next meeting in February.
  
• In the UK, the pound came under pressure on continued concern over the fiscal instability. The Bank of England left policy unchanged in their meeting, recognising the need to maintain stimulus measures.
  
• The size of the UK deficit, close to 12% of GDP, has raised concern the UK could lose its triple-A credit rating if it does not take sufficient action, which is weighing on the pound.
  
• The pound is trading slightly higher this morning as investors look to book profits going in to the weekend, with the price currently hovering around 1.78.

Euro is continuing to trade well below its 1.50 recent highs, under pressure from the financial health of certain eurozone nations

With little new information for the markets to take direction from yesterday, the euro/dollar pair held in range, eventually closing little changed from Wednesday's closing price.

• The single currency did post slight gains in the early afternoon session after a narrower-than-expected US trade deficit for October reduced safe-haven demand for the greenback.
  
• Data revealed that the US trade deficit narrowed in October to $32.94 billion from the $35.65 revised deficit in September, and against market expectations of an increase to around $37 billion.
  
• However, this was offset by US weekly jobless claims, which rose last week by 17,000 to 474,000, more than twice the market consensus of an increase by about 8,000 claims.
  
• Ongoing concerns over the fiscal health of Greece and Spain also capped gains on the single currency.
  
• Despite the higher-than-expected claims, the US equity markets traded on a positive note yesterday, which buoyed risk demand and enabled the euro to recover back over 1.47.

Little impact from the BoE statement yesterday, thought the pound is up against the USD this morning

Having given back early gains against the US dollar following the BoE announcement, sterling did find late support from higher equities to close the day on a positive.

• The Bank of England yesterday opted to maintain their quantitative easing programme, but did not expand it beyond the £200 billion already committed.
  
• Sterling had earlier stemmed losses from the previous day in the wake of finance minister Alistair Darling's pre-budget report and persistent concerns about Britain's fiscal health. But the pound did lose ground in the wake of the BoE decision with no mention of future rate rises.
  
• Until recessionary pressures ease we are unlikely to see the Bank unwinding stimulus measures, and further monetary easing will remain on the table.
  
• Sterling erased losses, though, after the US markets opened on a positive note, bringing the European equities out of the red and lending slight support to the UK currency.
  
• The pound is continuing to trade higher this morning, with the price currently nudging just over 1.63 as investors await key retail sales data from the US, released at 13:30.

Sterling and euro are trading within range, each under pressure from fiscal concerns

The pound relinquished early gains against the euro after the Bank of England made no mention of withdrawing extreme stimulus measures, with the pair closing near level for the day.

• As analysts had widely expected, the Bank of England kept its key interest rate on hold at a record low 0.5% and its quantitative easing asset-buying programme unchanged at £200 billion.
  
• Sterling had made some progress in the morning session, but gave these gains back following the BoE statement and as concern over Britain's precarious fiscal position continued to weigh.
  
• The prospect of low interest rates for an extended period will continue to put pressure on the pound, as policymakers are likely to wait for confirmation of economic growth in the fourth quarter of 2009, before they contemplate tightening policy.
  
• Chancellor Darling on Wednesday noted the daunting scale of spending cuts and tax rises needed to bring Britain's budget deficit into line, which means the BoE could be forced to keep monetary policy loose to compensate.
  
• With no new information for the markets, the sterling/euro pair traded sideways for the majority of the afternoon and evening session.
  
• This morning, the pound is marginally higher, but the pair are likely to remain tightly range bound throughout the day.

The RBNZ have stated that monetary policy will begin to tighten, boosting demand for the kiwi

Sterling lost over four cents, or 1.8% to the kiwi dollar in trading yesterday as the Reserve Bank of New Zealand hinted at future rate rises in their policy meeting.

• Sterling was under pressure throughout European trading after the UK's pre-Budget Report did little to ease lingering concerns over Britain's debt problems.
  
• The Chancellor, Alistair Darling, outlined various spending cuts and taxes, as well as lowering this year's growth forecasts, but little encouragement was given that the government would be able to curb the spiralling deficit.
  
• In the evening, the kiwi received a renewed boost after New Zealand's Central Bank opened the door to rate rises from as early as next April.
  
• The RBNZ said that it may start withdrawing monetary stimulus by the middle of 2010, amid an improving local and global economic outlook.
  
• This morning, the market is continuing to move the kiwi higher, with the sterling/NZD pair now trading at a one month low, currently hovering just below 2.24.

Strong employment figures are supporting the aussie

The pound slid 0.7% against the Australian dollar yesterday after the UK's pre-Budget Report failed to abate fears over the UK's deteriorating fiscal stability.

• Sterling lost ground after investors questioned the feasibility of the government's forecasts for borrowing and spending in the report.
  
• Some investors were skeptical of Darling's 1.5% growth projection for the UK economy in 2010, which in turn undermined his outlook for bringing down the country's deficit and debt.
  
• The aussie is continuing to trade strongly this morning in the wake of positive employment data from Australia.
  
• The data revealed the economy added 31,200 jobs last month, beating forecasts of a modest rise of 5,000. The result brought the overall unemployment rate down to 5.7% from 5.9% support strong aussie demand.
  
• Analysts noted that with unemployment now potentially on the decline, the RBA will be more confident in returning their base rate to pre-recession levels.

The single currency nudged higher against the USD yesterday and is holding around 1.47 so far this morning

The single currency reversed its recent downward trend against the US dollar, posting slight gains as the market felt the greenback's rally may have been over-stretched.

• The euro initially made up solid ground as investors reassessed a rally that had sent the greenback to its highest level in more than a month.
  
• The US dollar had advanced broadly on Tuesday after ratings agency Fitch downgraded Greece to below the single A bracket for the first time in a decade.
  
• The euro reversed these losses though, on the view that the weak status of Greece's public finances was already well known and that the currency's move had been overdone.
  
• In the afternoon, the dollar pared some its losses after the rating agency Standard & Poor's lowered its outlook on Spain's credit rating, adding to concerns that sovereign credit problems have not abated.

Concern over British fiscal instability weighed on sterling yesterday as it moved lower against the USD

Sterling continued its downward trend against the US dollar, edging lower as sentiment weighed on the fiscal health of the UK economy.

• The pound dropped to its lowest level in almost two months at $1.6169 as the UK government's pre-Budget report focused attention on the health of the country's finances.
  
• Concerns over government debt have come to the fore in recent days following a downgrade of Greece's credit rating by Fitch, the ratings agency.
  
• This has weighed on sterling, given the possibility that the UK may face a similar fate if it does not get its public finances in order
  
• The government's report deemed it too early to begin an assault on the UK's budget deficit, however, because of fears that deep spending cuts could choke off an economic recovery.
  
• The pound did recover some of its steep losses though as US equity markets enjoyed a slight rally later in the day lending support to the weakened UK currency.
  
• In trading this morning, the pound is continuing to move lower as investors await the BoE's rate decision. The market is widely expecting to see rates hold at 0.50%.

The UK currency was under pressure yesterday after the pre-Budget Report failed to ease concerns over the UK economy

After briefly spiking to an intra-week high, the pound slid back against the single currency yesterday as investors digested Chancellor Alistair Darling's pre-Budget Report.

• In the Report, the Chancellor admitted that the recession had turned out to be deeper than he predicted in April. He said he expected the economy to have shrunk by 4.75% in 2009, instead of the 3.25 - 3.75% he forecast earlier in the year.
  
• While cutting his growth forecast for this year though, Mr. Darling kept his prediction of a strong recovery next year and in 2011 and 2012.
  
• He talked of the "strength of the UK economy", predicting growth of between 1 and 1.5% in the coming year, which gave the pound brief support.
  
• However, the Report did little to ease ongoing fears of the UK's fiscal debt. With increased borrowing planned for next year, concerns are likely to linger over the possibility that the UK's triple-A rating may come under threat.
  
• In trading today, the markets will be looking to the BoE's interest rate decision at 12:30 and the accompanying statement where they may shed some light on when quantitative easing measures will come to an end.