Forex News

Sterling slid over three cents, or 1.5%, against the kiwi yesterday with improved risk appetite favouring higher-yielding currencies. Data released in New Zealand showed house prices in the country rose for the first time in 16 months, adding support to the kiwi dollar. In addition, growing optimism about the state of the Chinese economy, with a raft of economic data being released on Wednesday morning, supported demand for commodity-linked currencies such as the kiwi. Investors are pricing in positive economic figures from China tomorrow, underscoring the strength of the global recovery and supporting demand for higher-risk assets.

The pound fell half a cent against the aussie yesterday, as improved investor sentiment buoyed riskier currencies. The aussie found support as commodity-linked currencies were lifted by increasing investor confidence about the global economic recovery. Leading global equity markets rallied by over 2%, which buoyed risk appetite lifting the Australian dollar. In addition, high-risk currencies were supported as the IMF named the US dollar the currency of choice for funding the carry trade. In trading this morning, the pound has fallen further after ratings agency Fitch said the UK’s sovereign credit rating is most at risk among top-rated nations.

The single currency rose sharply against the dollar yesterday, gaining over one and a half cents in the wake of positive German data to close marginally below 1.50.Demand for the safe-haven US currency was muted as equity markets rallied strongly, with analysts noting that investor optimism continued to be supported by last week’s pledge from the Federal Reserve to keep interest rates at ultra-low levels for an extended period. In addition, the failure of the G20 leaders to discuss currencies in their meeting over the weekend implied a continued comfort among authorities with the dollar’s recent depreciation.

Sterling traded strongly against a broadly weaker dollar, achieving a three-month high of 1.6842 as investors were given a green light to sell the greenback. Rising risk appetite weighed on haven demand for the US currency as global equity markets rallied in the region of 2%, with the Dow Jones reaching its highest point this year. The dollar also came under pressure in the wake of the G20 meeting held over the weekend. The statement boosted risk appetite by saying it was too early to exit from current economic stimulus policies but made no mention of exchange rates.

The pound reached a near two-month high in early trading yesterday, but the euro eroded losses following positive data, with the pair closing marginally down at 1.1171. The euro found support yesterday after government data showed German industrial output rose more than economists had forecast as factories expanded production to meet export demand. Figures showed a larger than expected 2.7% rise in German industrial production, exceeding market forecasts of a 1.2%. In addition, data revealed that German exports jumped by 3.8% in September, which underscores Germany’s ability to export even in a strong euro environment and undermines the view of some eurozone finance ministers that euro strength is impeding the ability to export.

Sterling edged higher against the kiwi in trading yesterday, supported by solid data from the services sector to close the day up at 2.2834. The pound made marginal gains after a survey of purchasing managers indicated the UK’s dominant services sector saw activity rise at its fastest pace in more than two years. The data, which exceeded market expectations, followed on from positive manufacturing data earlier in the week and reaffirmed hopes that the UK economic recovery is not stalling. In trading this morning, the pound has backed off slightly in anticipation of the BoE’s interest rate decision, which analysts are suggesting is likely to cause volatility if the members disagree over the level of quantitative easing that is necessary.

Trading between this pair was relatively subdued yesterday with the aussie dollar creeping ahead by the close of play, helped by a jump in the price of gold. Support for the aussie remained dulled as investors continued to be discouraged following weaker than expected retail sales data. Although sales were improved from September, the data still revealed a month on month decline in overall sales value, some way below the anticipated 0.5% increase. However, the Australian currency did find support from solid equity and commodity prices, with gold in particular rising to just shy of $1100 per ounce after India’s central bank bought 200 metric tons of the precious metal from the International Monetary Fund.

The single currency rallied from recent lows against the dollar gaining 0.9% as the stock markets firmed and investors got reassurance of low rates from the US Fed. European equity markets reversed their recent downward trend yesterday lending support to the euro as the market sold dollars in favour of riskier assets. Weaker-than-expected predicted unemployment figures went relatively unnoticed in the markets, but the dollar did extend losses following data from the US ISM services sector, which expanded for the second consecutive month, eroding the greenback’s safe haven appeal. In the evening session, the euro jumped to a fresh intra-day high of 1.4905 as the Federal Reserve confirmed market expectations in making no change to their current stance on interest rate policy, calming any fears.

The pound climbed near a cent and a half, or 0.8%, against the US dollar, buoyed by positive UK services data and the Fed’s confirmation to keep rates low. Sterling found support against a weaker dollar after a UK index of service industries, like its manufacturing equivalent released on Monday, rose in October to the highest level since the onset of the credit squeeze in August 2007. The October figure came in at 56.9 versus 55.3 in September and a consensus forecast of 55.5. New orders also improved, suggesting that economic growth was gaining momentum.

Having posted solid gains throughout the morning and afternoon sessions, briefly reaching over 1.12, the pound slipped back, enabling the euro to close marginally up on the day. Sterling initially rose after data showed a higher-than-expected increase in UK service sector activity and as a rebound in equity markets eased risk aversion. The services PMI index rose to 56.9 in September, its highest level since August 2007, beating market expectations of a rise to 55.4, and the sixth successive month above the 50-level, which represents industry expansion. However, the euro recovered its losses in the wake of a strong rally against the US dollar, which came under heavy selling pressure following the Fed’s rate statement.

The kiwi dollar erased early losses yesterday as positive further positive data in the US attracted investors to the higher-risk currency.In early trading the pound gained steadily, benefiting from a hefty loss in global shares, which encouraged investors to trim their exposure to risk. Investors retreated from risk assets as European share prices fell 2% in the wake of renewed concerns over the banking sector. In the afternoon session though, data revealed that US Factory orders increased 0.9% in September, following an unrevised 0.8 decline in August, the fifth increase in the last six months.

The pound climbed back over 1.82 against the aussie after a statement from the RBA dulled the possibility of a rate rise in December. In their rate statement early Tuesday morning, the Reserve Bank of Australia, though they did raise the base rate to 3.50%, sounded a more dovish tone than many expected. In response investors pared back expectations of a further rate rise next month after Glenn Stevens, RBA governor, said higher rates would come “gradually” and that the rise in the Australian dollar, which has gained 27% against the dollar so far this year, might hurt exports and economic growth.

The dollar rose to a one-month high against the euro yesterday as a sell-off in global equities drove haven demand for the US currency.The dollar climbed strongly as stocks fell on evidence that banks are struggling to shake off the effects of the financial crisis, damping higher-yield demand. The single currency declined sharply from a session high of 1.4810 on Asian trade moving to a fresh one -month low at 1.4645, as stock markets plunged following weak results from UBS and news that RBS and Lloyds will undergo a severe shake up.

Sterling pulled back over a cent and a half from a two-week low of $1.6264 hit against the dollar yesterday morning, to close the day marginally up at $1.6427. Initially, the pound fell sharply after the UK Treasury announced a shake-up of British banks and as investors braced for a possible extension of asset purchases by the Bank of England this week. Britain’s two largest retail lenders, the part-nationalised Royal Bank of Scotland and Lloyds Banking Group will between them sell off businesses equating to 10% of the UK retail banking market to appease EU competition concerns.

Sterling posted solid gains against a broadly weaker single currency yesterday, rallying to a close of 1.1155 as the EU commission voiced concern over the eurozone economy. The pound erased Monday’s losses against the euro as demand for the single currency waned in the wake of an EU report that spoke of a “highly uncertain” recovery in the eurozone. Fears over the banking sector within the 16-nation bloc also brought the single currency under pressure, with the EU Commission estimating huge potential bank losses in 2010. In addition, European stocks fell sharply in the wake of news that UBS, the Swiss bank, reported a greater than expected loss.