After losing significantly during most of this Wednesday’s session as risk aversion prevailed globally, the kiwi rebounded in currency markets as retail sales advanced in the country reviving the confidence regarding the Southern Pacific economy.

The New Zealand dollar had its worse decline in two months this Wednesday as consumer prices showed negative figures, but a retail sales report published in this Thursday early morning in the country revived confidence in the currency as figures came better than forecasts suggested.

NZD/USD traded at 0.7227 as of 12:51 GMT from as low as 0.7185 hours earlier.

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The Canadian dollar declined versus its U.S. counterpart and

lower-yielding currencies as risk aversion rose impacting markets with extreme influence in the loonie rates, those of raw materials and equities, which dropped globally this Friday.

The loonie was impacted today as energetic and metallic commodities declined, specially the crude oil, as raw material exports account for more than half of the country’s international trade revenue, in a day of bearish markets in New York and Toronto. China’s new tightening lending policy declined appeal for high-yielding currencies, and despite U.S. mediocre data published in reports this Friday showing a slow down in the country’s inflation, the greenback advanced versus the loonie after touching a three-month low earlier this week.

The Canadian dollar has been fluctuated in almost perfect correlation with commodities in the beginning of 2010, despite the country’s fundamentals, which are also adding confidence for the loonie to gain in currency markets, according to analysts. As the crude oil retreated below $80 a barrel, the loonie’s rally was halted, but may continue if risk appetite returns during the next weeks.

USD/CAD traded at 1.0284 as of 16:38 GMT after touching 1.0219 yesterday. CAD/JPY declined to 88.27 from 88.85.

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The Japanese currency declined in the beginning of this Thursday’s session on Australia’s better than expected employment data, which increased attractiveness for riskier assets as the South Pacific economy recovery improves confidence among traders.

The yen, known as the best refuge currency for times of uncertainty, declined today as unemployment surprisingly fell in Australia, bringing Japanese investors to buy riskier assets overseas, as the Australian economic recovery indicates better economic conditions not only in the South Pacific region but also among its main trading partners.

AUD/JPY traded at 85.01 as of 02:35 GMT from a previous rate of 83.89 in the intraday chart.

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The Australian dollar climbed after employment figures were published in the country with

better-than-expected numbers, adding confidence that the economic recovery in the country is accelerating its pace, spurring demand for assets in the South Pacific region.

After unemployment in Australia declined to 5.5 percent and surprised forecasts that expected an increase, the Aussie dollar gained versus most of the main traded currencies, specially lower-yielding options like the Japanese yen, impacted by the growing risk appetite in Australia.

AUD/CAD traded at 0.9579 as of 02:27 GMT from 0.9504 hours before the employment figures were published in Australia.

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The U.K. currency extended Friday’s gains versus the U.S. dollar today as global optimism helped speculations that an economic recovery in the U.K. will make its currency more attractive in

foreign-exchange markets.

A business report published today by a private company in the U.K. indicated that confidence regarding economic conditions has improved substantially in an annual comparison, helping the pound to post another day of gains versus the greenback after a Chinese trading report suggested that the global economic recovery expected for 2010 is so far being confirmed, as both exports and imports climbed in China.

GBP/USD traded at 1.6111 as of 23:08 GMT from 1.6069 when markets opened yesterday.

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In trading on Friday, the pound slipped back from two-week highs around the 1.8000 level against the aussie as a weak GDP figure dulled demand for the UK currency.

• A report showed that the UK failed to exit the recession in the third quarter of this year, giving the central bank more reason to keep enacting emergency measures to spur growth.
• The data showed that the UK contracted by a further 0.4%, disappointing expectations of a 0.2% expansion and firmly halting the pound’s progress.
• Where as in Australia interest rates have already been raised on the back of growing confidence in the economy, the UK may now be considering further loosening its monetary policies as recovery struggles to take hold.
• In trading this morning, the pound continues to fall, currently down 0.4% after the aussie received a boost from a Chinese report that suggested authorities were looking to diversify the country’s foreign exchange reserves.
• The report suggested that China may look to buy up euro’s and yen, which analysts said could also spill over into the aussie providing further demand.

A broadly stronger pound hit a two-week high against the aussie, briefly rising over 1.8000, as confidence in the UK economy gained momentum.

• Sterling jumped following the minutes from the Bank of England’s latest policy meeting, which dampened expectations of an extension to quantitative easing.
• The minutes appeared to move the balance of market expectations to the possibility of a pause of the government’s asset purchase scheme in November, reversing recent speculation.
• In addition, the aussie dollar found its strength undermined as commodity prices, most notably oil, turned lower, discouraging investors from the higher-yielding currency.
• In trading this morning the pound has continued to advance, reaching back over 1.80, as investors cut long positions in the “riskier” currency after Chinese data dashed expectations of some who were betting on a positive surprise.
• The most significant figure, the Chinese 3rd quarter GDP, revealed a growth rate of 8.9%, bang in line with expectations, however there had been hopes of over 9.0%.

Dollar selling in the market was stepped up with investors moving into the pound as the MPC minutes proved more positive than expected.

• The pound climbed over 1.66, posting a two and half cent gain against the dollar as the minutes from the Bank of England’s October monetary policy meeting struck a less dovish tone than recent comments suggested.
• Analysts said the most important story within the release was the fact that in the September meeting, governor Mervyn King thought an expansion of the central bank’s quantitative easing programme could be justified. But there was no mention of that in this latest meeting.
• Additionally, the pound was given further support after Mr King said in an opinion piece in Scotland’s Herald newspaper that, “it would be wise to take account” of the prospect of higher interest rates, heightening confidence in the UK economy.
• The dollar is up slightly in morning trading as a raft of Chinese data, though positive, failed to offer any major surprises, gaining in line with market expectations.

The single currency resumed its climb against the dollar in trading yesterday, supported by rising confidence in the global recovery, closing the day up 0.4%.

• The euro hovered just below the psychologically important 1.50 level as the US dollar remained under selling pressure on expectations that US interest rates will remain pinned at record lows well into 2010.
• The single currency also found support as some investors speculated finance ministers from the 16-nation region meeting in Luxembourg would focus on the currency’s strength.
• The dollar came under further pressure as the continued confidence over the prospects of a global economic recovery were reaffirmed as the Dow Jones opened up over 10,000, keeping haven demand for the dollar in check.
• Late in the afternoon, the Fed added to the greenback’s woes after stating that it has been testing its reverse repurchase agreement tool but is not about to use it, suggesting that US monetary policy is not set to tighten just yet.

Sterling managed to close last week at a near two-week high of 2.2056 against kiwi, as the UK currency continued to build on support from a BoE official.

• The ailing pound managed to build on Thursday’s gains, rallying a further 1.2% against the kiwi on Friday, in the wake of a Bank of England policy maker signaling satisfaction with the impact of the central bank’s quantitative-easing strategy.
• Investors took the opportunity to take strong profits that had been built up earlier last week, taking the sterling / kiwi price back over 2.20.
• However, analysts warned that the fundamentals for the pound are still negative, with interest rate differentials favoring high-yielding currencies.
• This week’s minutes of the Bank of England meeting may also reinforce the fragile nature of the economic recovery, and the likelihood of rates remaining at this low level for some time.
• Indeed in trading this morning, the pound has relinquished much of the ground it had recovered, already two cents down on the day as confidence remains high in the New Zealand economy.

Sterling recovered some of its recent extensive losses against the aussie dollar yesterday, climbing over two cents, to close up at 1.7668.

• Bank of England member, Paul Fisher, said yesterday that policy makers would be more likely to pause asset purchases in their upcoming meeting in November, giving themselves the option of “doing more later,” rather than stopping them.
• His comments were taken to read that the MPC is unlikely to extend their quantitative easing programme, supporting a slight rise in confidence in the UK economy, strengthening the pound.
• In broad terms, the aussie traded strongly against most currencies yesterday as positive economic data in the US led to investors adding to their long positions in the higher-yielding currency.
• Indeed in trading this morning, the pound has halted its climb, with the pair currently holding around the overnight closing price, as enduring aussie strength offsets sterling’s rally.

The pound reversed its steady decline against the greenback yesterday as investors relinquished defensive positions ahead of today’s MPC announcement.

• Cautious investors initially sought safety ahead of the two key central bank meetings today, putting pressure on the UK currency.
• Additionally, in an interview, Kansas City Federal Reserve President Thomas Hoenig said that the US central bank should start raising interest rates “sooner rather than later,” which buoyed confidence in the US economy.
• However, the greenback’s gains were limited, with the pound rebounding a cent from its intra-day low as investors felt that the market had gone too short on sterling positions ahead of today’s statements.
• In trading this morning, the dollar has been broadly sold as employment data in Australia beat expectations for a fall in jobs in September, with the rate actually falling to 5.7%.
• The pound has advanced nearly a cent, consolidating its positions above 1.60, although trading may be volatile following the MPC rate decision, announced at 12:00BST today.

The pound continued to edge downward, undermined by speculation ahead of the MPC meeting later this week.

• Data revealed that Britain’s services sector grew more strongly than expected in September, expanding at its fastest rate for two years, quelling fears over the UK recovery following weak PMI data in the manufacturing and construction industries last week.
• However, the data failed to buoy confidence in the pound significantly with investors remaining wary of taking positions in UK assets ahead of the MPC statement this week.
• Additionally, business activity in the US non-manufacturing sector expanded in September, against market expectations of standstill, which supported dollar buying.
• The equity markets also rallied from lows at the end of last week, as confidence returned to the markets, however this was of little benefit to a burdened pound, with the pair closing relatively unchanged at 1.5934.
• The US currency has come under pressure this morning however, following speculation that the dollar may be dropped as the currency used in oil trades in the Gulf States, allowing the pound to make hesitant gains.

The pound advanced a further cent against the aussie on Friday, building on strong gains, as investors remained cautious following weak US employment figures.

• The US economy suffered 263,000 job cuts in September, which was far more than had been expected according to official data, sapping demand for ‘riskier’ assets.
• The pound advanced to over 1.84 as investors sold off the risky currency amid concerns that the US recovery may not be as robust as initially thought.
• However, the pound did cap its gains, as the US data dragged down European equities, with the FTSE falling below 5000 points, which dampened confidence in the UK currency.
• This morning, the Australian dollar as advanced strongly, up nearly a percent, as speculation mounts that the country’s central bank could raise rates later this week.
• Investors had been pricing in a possible rate move in early November, but the probability of a move toward 3.25 is now possible as early as tomorrow’s meeting, following comments from two Australian media columnists.

The pound made gains yesterday, taking support from a revised IMF report and an easing of risk activity to close the day at 2.2316 up 0.7%.

• Rising risk aversion enabled the pound to advance over a cent against the kiwi yesterday, with investors retreating into haven currencies.
• US employment claims rose last week, posting a figure well above forecast, dulling hopes of a swift recovery in the US, but supported gains for the UK currency.
• The negative data led to a sharp retreat in equity markets which prompted investors to sell the higher-yielding currencies.
• Additionally, the International Monetary Fund revised their UK growth prediction next year to 0.9% from 0.2%, which boosted confidence in the UK economy.
• This morning, sterling has slipped back slightly, currently trading marginally below the 2.23 level ahead of US non-farms payrolls data.

The pound slowed its rate of decline against the kiwi yesterday, falling just 0.03% as weak Asian trading dulled risk appetite.

• The pound slipped lower, but stemmed its rate of decline as demand for the higher-yielding currency was curbed following weaker trading on the Asian markets.
• Sterling has been broadly sold recently following comments from the King and BoE, however the strong European stocks prevented the pound from sliding too sharply yesterday.
• Major European and US stock indices climbed between 1 and 2%, firming up confidence in the global recovery, and lending slight support to the ailing pound.
• In trading this morning however, the kiwi has already advanced 0.7% following positive building consents data from New Zealand, which has encouraged investor demand.
• Analysts say that with stocks continuing to push higher and central banks not yet ready to unwind stimulus measures, the New Zealand dollar is likely to maintain its upward trend.

Talk of a slow recovery in the eurozone strengthened demand for the dollar yesterday allowing it to recover 0.5% to 1.4618.

• Support for the single currency was curbed slightly following the words of European Central Bank President Trichet, who spoke yesterday of a slow recovery in the 16-nation region.
• The governing council of the ECB considers that it would be premature to declare the crisis over, stating that now was not the time to implement an exit strategy.
• Additionally, analysts have said that on the whole, although the euro / dollar price is biased to the upside in the medium term, the single currency is now being challenged by corrective weakness.
• The single currency has dipped lower again this morning, currently trading marginally below 1.46, as investors hold off taking positions ahead of important US data this afternoon.
• There is a consumer sentiment survey out in the US at 15:00BST, which is forecast to reveal improved confidence in the market, which could weaken demand for the dollar.

Having traded in the red for most of the day, the pound rebounded in the afternoon to close the day marginally up at 1.0859.

• ECB President Jean-Claude Trichet in a speech yesterday stated that the European economy will likely recover slowly in the coming months.
• Trichet continued, saying that it was too early for the ECB to stop pumping liquidity into the economy or to raise interest rates, which slowed demand for the single currency.
• Additionally, data showed that consumer prices in Germany fell faster than expected in September, which was a steeper decline than the market had looked for, capping the euro’s gains .
• In the UK, Hometrack Ltd revealed that UK house prices increased by the most in two years during September as confidence in the property market improved, although the news went relatively unnoticed by the market.
• Second quarter current account data and a revised GDP figure are out today at 09:30BST with forecasts predicting slightly improved numbers from the first quarter, which could lend support to the pound.

Confidence in the UK currency remained weak on Friday in the wake of comments made by Mr King and the BoE, with the price sinking below $1.60.

• Having initially fallen to a four month low of 1.5921 in the early hours of Friday morning, the pound proceeded to consolidate above 1.60, with analysts suggesting that a bullish correction was expected in the wake of Thursday’s plunge.
• However, bearish sentiment towards the pound soon returned, with traders continuing to dump the British currency on perceptions that the BoE would lag other countries in tightening its loose monetary policies.
• In the afternoon, a worse-than-expected reading in U.S. durable goods orders triggered a risk aversion rally, which also helped to send the pound back down near its intra-day low.
• Additionally, analysts noted that the pound’s slide led Japanese retail traders to liquidate sterling/yen long positions, adding further selling pressure.
• In trading this morning, the pound is down half a cent as a rise in risk aversion is spurred by weaker stock trading in the Asian markets.