The pound edged down against the kiwi as rising risk appetite in the market offset the BoE’s decision to hold their monetary policy unchanged. Investors continued to buy into the higher-yielding New Zealand dollar, encouraged by rallying global equity markets and a broadly weaker dollar.In the UK, the BoE kept interest rates at 0.5% and decided against extending the quantitative easing programme as some had feared.However, the decision only gave the pound a muted boost against the kiwi, as investors had already priced the news into the market.In trading this morning, the kiwi has trimmed its gains as investors lock in some profits and as comments from the Fed Chairman suggested that the US may need to tighten monetary policy, spurring a slight return to the US dollar.However analysts have noted that overall market sentiment towards the kiwi is still pretty bullish, and that any upward movement for the pound is likely to be as a result of profit taking, rather than decreasing demand for kiwi assets.
Posts Tagged ‘Interest Rates’
Demand for the kiwi remained strong yesterday, but it has lost ground in the wake of comments from Ben Bernanke
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Euro advanced against the greenback, buoyed by a relatively upbeat ECB rate statement
The single currency climbed to a two week high of 1.4815 yesterday as investors continued to sell the dollar to fund riskier trades. The single currency returned to its recent upward trend, initially climbing half a percent, as investors took up dollar selling in the wake of further evidence of global economic recovery. Australian employment data revealed a rise in jobs in September, reinforcing risk appetite and triggering broad dollar selling as its haven appeal weakened. The single currency held its gains in the afternoon after the European Central Bank left interest rates unchanged at a record low 1.0%, as the market expected.
Pound advanced vs a weakened dollar yesterday, supported too by a hold in the UK’s QE programme
The pound climbed just over a cent (0.6%) against the dollar, buoyed by the BoE’s decision to keep its assets purchase scheme on hold.In early trading sterling moved up against a broadly weak dollar, supported by expectations that the BoE would keep interest rates unchanged and maintain its current level of quantitative easing. The dollar also came under pressure, falling broadly as rising equity markets fuelled demand for riskier assets at the expense of the safe haven US currency. Dollar selling was led by positive employment data in Australia, which spurred investors to relinquish positions in the greenback in favour of higher-yield currencies, favouring an upward movement in the sterling/dollar pair.
Investors were cautious yesterday ahead of an ECB rate decision, but the euro has rebounded this morning
The euro relinquished some of its recent gains against the greenback yesterday, with investors on the defensive ahead of the ECB rate decision today. A broadly stronger dollar was the currency of choice yesterday as investors trimmed “riskier” positions in favour of the haven currency as equities slipped into the red, easing risk appetite.The dollar also benefited after a US official said raising interest rates would not derail the US economic recovery. “Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy.Additionally analysts noted that the greenback was being supported by speculation that the dollar’s decline may have been too fast to sustain.In trading this morning, the greenback has come under pressure after Australian employment data reinforced demand for higher-yielding assets. The ECB are widely expected to announce today at 12:45BST that interest rates in the eurozone will remain at a record low of 1.0%, though the tone of the accompanying statement is likely to reflect growing optimism over the state of economic recovery in the region.
Sterling edged up against a broadly weaker dollar ahead of important central bank announcements
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.
Sterling posted gains vs the single currency, with the market forecasting no change in MPC policy
Having hit a fresh six-month low against the single currency in early trading , the pound rebounded yesterday, to close up half a cent at 1.0864. Unexpectedly weak data in the UK manufacturing industry on Tuesday continued to weigh heavily on the pound, dragging sterling to a 6-month low of 1.0781. With little data out in either the UK, the eurozone, or the US yesterday, markets initially continued to take direction from Tuesday’s data, which supported sterling selling. The euro trimmed its gains though following the second quarter final GDP figure for the eurozone, which was revised downward from a contraction of 0.1% to 0.2%, dampening the broadly positive sentiment towards the currency.
The kiwi dollar has risen sharply following a positive business survey and the RBA rate increase
The kiwi dollar posted a 2.1% gain, a movement of four and half cents, against the pound yesterday in the wake of a strong business confidence survey. During European trading hours the kiwi gained steadily, supported by speculation that Australia would raise their interest rate level. The kiwi was also buoyed by rising risk appetite as global stocks held up despite a weak US employment report on Friday. In late evening though, the kiwi received a solid boost after the respected NZIER survey revealed the first optimistic figure since the fourth quarter of 2006, triggering investor demand for the New Zealand currency.
A rise in aussie interest rates broadly strengthens the Australian currency
Speculation over an imminent rate rise in Australia sent the pound tumbling yesterday, losing 1.5% to close at 1.8146. The Australian dollar advanced strongly as expectations grew that the Reserve Bank of Australia would move to raise interest rates at its policy meeting. Forecasters were split evenly over whether the Reserve Bank of Australia would keep rates on hold in their meeting tomorrow or wait until November or December to raise rates by 0.25 basis points. Expectations were given a further lift as figures yesterday showed that Australian job advertisements last month rose at their fastest pace since late 2007, fuelling optimism over the country’s recovery.
Aussie made strong gains yesterday as further positive economic data supported investor demand
Tuesday’s gains for the pound proved short lived as the aussie advanced over two cents (1.3%) to send the price down to a close of 1.8091. The aussie was buoyed by a larger than expected rise in retail sales in Australia, which heightened expectations that the Reserve Bank of Australia would be among the first of the world’s leading central banks to start raising interest rates. Sales beat forecasts in jumping 0.9% in August from a 0.9% decline in July, which buoyed demand for the high-yielding currency. Analysts noted that the aussie dollar is being well supported from Australia’s status as a big beneficiary of the solid Chinese economy.
Positve UK data enabled the pound to reverse losses against the aussie yesterday
The pound reversed recent losses to gain 0.75% on the aussie yesterday in the wake of some positive economic data, which spurred investor demand. A GDP revision showed that British output contracted 0.6% in the second quarter compared with activity in the first three months of 2009, better than the previous estimate of -0.7%, according to the Office for National Statistics This data was supported by higher realised sales and an increase in net lending to individuals, which, together, underlined hopes that the UK should pull out of recession in the 3 rd quarter.
The UK economy is showing signs of recovery, which has buoyed the ailing pound
In trading yesterday the pound picked itself up from 6-month lows against the single currency, gaining 0.7% as positive data buoyed investor sentiment. In a final revision, Britain’s second quarter GDP figure was reported as -0.6%, up from a previous revision of -0.7% and strengthening claims that the UK will exit recession in the third quarter. There was also positive data from the UK CBI retail sales index, which showed considerable improvement from last month, reaching levels well above expectations. Additionally, lending to individuals rose in August, reflecting both an increase in the willingness of high street banks to extend credit, and also improved consumer confidence in the market as they begin to take on more debt.
Pound edged higher against the euro yesterday and has consolidated its position this morning
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 .
The pound has reversed recent losses against the aussie, supported by rising risk aversion
The pound lost another 1.0% to the aussie dollar on Friday to close at 1.8373, as selling pressure remained strong. The aussie dollar reached a twenty-four year high against the pound on Friday, as King’s comments continued to weigh heavily on the pound. On Thursday, the BoE governor made it clear that he was not too concerned about the current weakness of the pound, and that he was in fact in support of its current value in order encourage a rebalance towards an export led economy. The news reaffirmed that interest rates would remain low for some time, which encouraged investors to sell the pound in favour of the high-yielding aussie.
Positive economic data from NZ, keeps the kiwi rallying higher vs sterling
The New Zealand dollar advanced for the third consecutive day yesterday, as demand for kiwi assets remained high and as sterling weakness becomes ever more apparent. The kiwi gained another two and half cents (1.1%) yesterday after the BoE announced that it was perfectly content with a lower currency exchange rate and was unlikely to initiate any type of tightening into its monetary policy for the foreseeable future.The kiwi also continued to be supported by positive economic data from New Zealand, which supported claims that the RBNZ is considering raising interest rates.The New Zealand currency has found support today after the G20 did not indicate any imminent withdrawal of stimulus measures, triggering a rush back into higher-yielding assets.Initially the kiwi lost ground following disappointing local trade data released late last night, but it has rebounded strongly, climbing 0.75% in trading so far today.
Aussie hits new highs on sterling weakness and a rise in demand for higher-yielding currencies
Selling pressure on the pound and demand for higher-risk currencies saw the aussie advance to a fresh twenty-year high of 1.8464 against the pound. Remarks by Bank of England Governor Mervyn King to a regional newspaper published yesterday underscored the central bank’s lack of concern about the weakness of the pound, which sent the currency spiraling.The aussie received further support as investors shifted funds into higher-risk currencies after the US Fed bolstered expectations that interest rates would remain low for some time.Risk appetite was also encouraged after the G20 meeting, where a statement showed signs that that global stimulus measures would remain in place, buoying demand for the Australian dollar.
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