On Saturday, CCB (China’s Central Bank) said that it has planned to strengthen and widen the trading band of the Yuan against the dollar range. This would however able to permit the international pressure to hardly control the frequency of the currency to get on with its appreciation.

Every trading day, the central bank fixes the range of the Yuan as 0.5% midpoint price of Yuan. Nevertheless of the restriction made for the trading day, new rules will be commencing from Monday. This new rules will not let 0.5% to fluctuate in either side but to will allow 1% to swing in either side.

Yuan exchange rate is widely criticized by the Beijing trading partners and they emphasized that it is kept low in all way through the trading. Huge export range and the trade deficits are prevailing between china and other countries.

The trading partners (China and USA) decided that announcing the fluctuation of Yuan against dollar will not demand much of the appreciation. The key factor of china’s economy is manufacturing sector. China withers the grip against Yuan and as it moves in regards with the faster appreciation.

To balance the exchange rate, to enhance the feasibility and to meet up with the demands of the market the Central Bank of china decided on the new rules. Chinese economist, Ting     Lu said that the international pressure against Yuan is high expecting the trading band to be at 0.7% against their market expectations.

To keep the RCB exchange rate so stable, the domestic market range and financial conditions of china is now able to fulfill the exchange rate demands. RMB (Renminbi) and USD appreciation is critically suffering with the external pressure applied to make the deficiency currency.

A statistics revealed that if the country feels them to be top in the world’s economy then they must avoid job losses to citizen, hard landing and social unrest factors.

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The pound edged higher, achieving its biggest weekly advance against the euro since January, as signs pointed to the UK economic recovery talking hold.

• The pound/euro pairing was little changed at the end of last week, though sterling did creep up, supported by reports showing gains in consumer confidence and UK house prices.
• Month-on-month property prices were up for the sixth consecutive month in October and were 2% higher than in the same month the previous year. However, the pace of monthly price rises has eased, going up by just 0.4%.
• Meanwhile in the eurozone, data revealed that the unemployment rate rose to 9.7%, in line with market expectations, which raised concerns that recovery could still be destabilised, dulling demand for the euro.
• Last week the Bank of England completed its £175 billion asset purchase programme and so investors are now looking toward an extension of QE in their meeting this week.
• Analysts have noted that until the market is confident the BOE is done with quantitative easing, it is going to be very difficult for sterling to rally significantly from current levels.

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Sterling extended its rally, briefly climbing above $1.66 as the dollar sold off broadly after strong economic growth data spurred demand for riskier assets.

• In early trading, the pound found support from data that showed UK mortgage approvals for September increased to their highest level since February last year, exceeding market forecasts.
• Risk appetite was buoyed further in the afternoon after a report showed the US economy returned to growth in the third quarter, boosting stocks and reducing the appeal of the relative safety of the greenback.
• The US economy in the third quarter grew by 3.5% on an annualised basis, beating market expectations of a 3.3% rise and easing recently voiced concerns over the strength of the US recovery.
• Analysts noted that with the US GDP figure meeting market expectations, market players returned to using the dollar to fund carry trades, driving the US currency lower.
• The gains of 1.0% helped propel sterling toward its first monthly advance versus the dollar since July.
• However, gains were capped as the Labor Department revealed that unemployment claims inched lower in the week to 530K but missed forecasts of a drop to 520K.

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The pound advanced by 2.3% against the aussie as risk appetite stumbled in the wake of weak US economic data and a steep slide in global equities.

• In the early session, Australian inflation data was revealed to be slightly below expectations, leading investors to pare bets that the Reserve Bank of Australia will decide on a hefty interest-rate hike next week.
• The consumer price index rose in the third quarter by an annual 1.3%, the smallest gain since the second quarter of 1999, after advancing 1.5% in the previous three months.
• In addition, the price of gold continued to fall in trading yesterday, finding resistance around $1030 per ounce, which dulled demand for the commodity-driven currency.
• The pound was able to reach a three-week high of 1.8290 as investors shed their risky assets yesterday, and the pound could advance further if the US GDP data, released later today, disappoints market expectations.

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Sterling edged up against the aussie yesterday, benefiting from improved UK sales data, which supported claims that the UK economy is recovering.

• On Monday evening, MPC member Adam Posen, following negative GDP data, stated that there were still signs of an economic recovery even if Britain is behind other countries in pulling out of the recession.
• His statement found support yesterday after the UK CBI sales showed month-on-month improvement, beating market expectations and buoying demand for the UK currency.
• The UK currency has pushed higher in trading this morning after investors pared bets of a steep rate rise in Australia after inflation data did not increase by as much as some had anticipated.
• The quarterly CPI figure came in at 1.0%, which tilted the markets away from pricing in a more aggressive upward rate movement at the next RBA meeting on Nov 3 rd.
• Currently the pair are trading around the 1.80 level, just below a three-week high for the pound.

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The dollar rose against the single currency for a third consecutive day in its longest advance since August, as a report showed US consumer confidence fell this month.

• The euro struggled in trading yesterday after data showed that public sector lending in the eurozone declined by 0.3% in September compared to this period last year.
• The figure raises concern that there are still few signs that the ECB’s unlimited provision of liquidity to banks is prompting any pick up in eurozone broad money lending, which could put pressure on the single currency.
• The euro then continued to slide, after data revealed that US consumer confidence unexpectedly fell in October as fears about future job prospects increasingly preyed upon the American public.
• The index fell to 47.7 from 53.4 in September, disappointing market expectations of a rise and spurring a return to perceived safety of the greenback.
• In addition, traders noted that as the single currency breached a key technical level at $1.4850, stop-losses were triggered, which pushed the single-currency to a two-week low of $1.4773.

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Sterling closed up against the dollar yesterday, but slipped back nearly a cent from its intra-day high after a survey showed that consumer confidence in the US disappointed market expectations.

• In early trading, the markets continued to take the pound higher with analysts noting that long term investors and Asian reserve managers were attracted by sterling’s one-week low.
• This trend was maintained as the UK CBI retail sales index advanced to a balance of +8 in October from a balance of +3 in September, the largest advance since June 2007, beating forecasts.
• There was also support for the UK currency as the oil giant BP reported third-quarter profits of $4.98bn (£3bn), which experts said “obliterated” market predictions.
• However, the dollar trimmed its losses in the afternoon after a survey revealed that US consumer confidence dropped in October. The index produced a figure of 47.7, substantially less than the 53.7 forecast, which cautioned traders against risky investments.
• The weak report bodes ill for the US economy indicating restrained consumer spending, and suggests that the recovery is not as entrenched as initially thought.

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Data this morning has run significantly against market expectations, confirming that Britain is still in a recession. The UK’s third quarter GDP figure was revealed to be a 0.4% contraction, which now means that the UK has suffered 6 consecutive quarters of negative growth. Market participants had speculated that the UK economy would grow by 0.2% in the months from July to September and had taken the pound slightly higher this morning.

There has been data recently though that points to this disappointing figure. Data in early Ocotber revealed that manufacturing production had fallen by 1.9%, significantly below forecast and this has clearly weighed heavily on overall output. In addition, yesterday’s UK retail sales figures, showed that there was no growth in High Street activity in September, which was a further warning that the economy may not yet be expanding.

Investors will now be looking ahead to the Bank of England’s next policy meeting on the 5th November, where the members will have to seriously consider the possibility of extending their asset purchase scheme. Recently, we have seen G20 countries preparing to make steps to remove monetary stimulus measures as the global recovery strengthens, however the BoE still clearly has a long way to go before such steps can be taken. Even dovish market participants were not expecting Britain’s economy to have contracted by as much as 0.4%, a figure that truly underlines the fragility of the recovery.

As the news was reported, the pound dropped a full percent against both the euro and the dollar, as investors hurried to sell their sterling. Looking to the short and even medium term, the UK currency will remain under heavy selling pressure, with confidence in the economy shot. That we are still in a recession and with the possibility of further QE now back on the horizon, investors will see little hope of an interest rate rise in Britain even into 2010, which will heavily on the value of sterling.

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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%.

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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.

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Sterling climbed over a cent and a half against the kiwi in trading yesterday as the market briefly turned bearish on higher-yielding currencies.

• The pound reversed losses incurred on Monday, but closed the day some way from its intra-day high of 2.2000 as investors held back from taking significant positions ahead of the UK MPC minutes released today.
• The kiwi dollar, which has broadly risen as the global economy shows increasing signs of recovery, fell back as demand for “riskier” assets stumbled following some weak economic data from the US economy.
• The US Producer Price Index revealed an unexpected monthly drop of 0.6%, with forecasts predicting a rise of 0.1%. Housing starts also disappointed market expectations, resurfacing concerns over the pace of US economic recovery.
• In response, global equities also halted their recent rally, which spurred a pull back from higher-yielding currencies, allowing the pound to gain.
• In trading this morning, the pound is broadly rising, sustained by the minutes from the latest UK MPC minutes, which revealed that a unanimous decision to keep QE on hold.

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The single currency slipped back from a fresh 14-month high against the dollar following further comments from the ECB that expressed apprehension over the euro’s strength.

• In early trading, options buying once again prevented the euro from pushing through the psychologically important $1.50 level, posting a high of $1.4993.
• The single currency was supported after further positive corporate earnings weighed on haven demand for the dollar, emboldening investors to sell the low-yielding US unit to fund the purchase of riskier, higher-yielding assets elsewhere.
• However the euro fell back as the ECB repeated their support for the US Treasury’s self-professed strong-dollar policy, and expressed concerns over recent “volatile” trends in the market and the strength of the single currency
• In the afternoon Wall street slipped as tame US inflation data offset strong quarterly earnings from Apple, denting investor appetite to sell the low-yield dollar.
• The economic data, which showed that the US PPI unexpectedly dropped by 0.6% last month, disappointed market expectations and helped the greenback recover earlier losses, though analysts said that it would remain under pressure as long as stocks continued to show an upward trend.

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Sterling capped its five-day upward trend against the dollar, falling back from a one-month high of $1.6487 as weak economic data supported the haven currency.

• In early trading, sterling held steady against the dollar after UK public finances showed a weak figure but better than market expectations, which offset the negative impact of news that Qatar are selling a significant stake in Barclays bank.
• Data showed a deficit reading of £14.8 billion bringing Britain’s public spending to its worst six months on record, however, the data was better than forecasts, which analysts said boosted sterling’s gains.
• In addition, the US dollar came under pressure as risk appetite continued to rise following encouraging quarterly earnings from US corporations, such as Apple and Caterpillar.
• The US currency found some support in the afternoon though after data revealed weaker than expected US PPI and housing starts figures, which were able to induce some haven demand for the broadly weak dollar.
• In trading this morning, the pound has resumed its upward trend against the greenback, currently up over a percent as the UK MPC minutes confirmed that the decsion not to extend QE was unanimous.

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Sterling dipped slightly against the single currency, relinquishing gains in the afternoon as US equities slipped back, closing the day down just 0.1% at 1.0958.

• In early trading, investors picked up on comments from the ECB President who added to remarks from other eurozone officials expressing worries about the strength of the single currency.
• In response the markets took the euro slightly lower, enabling the pound to reach up over 1.10, near Monday’s 3-week high.
• In addition, the pound gained slight support after the UK public spending deficit in September fell short of market expectations, buoying investor sentiment.
• However, the euro trimmed its losses in the afternoon as global equities turned negative and investors cautioned over taking long positions ahead of a speech by Bank of England Governor Mervyn King in the evening.
• In trading today, the pound has broadly strenghtned as the MPC minutes from their latest meeting sounded a relatively positive tone. Currently the UK currency is trading one percent up on the single currency, approaching €1.11.

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The US currency snapped a four-day losing streak against the euro, rising from a 14-month low, as investors cautioned their risk activity following further corporate earnings reports.

• The dollar strengthened as Bank of America earnings fell short of expectations, sparking profit taking in the euro, as well as higher-yielding currencies.
• The Bank reported losses of $1 billion in the third quarter, which sent equity markets down having rallied on the more positive earnings of other major US banks and corporations earlier in the week.
• This report aided the dollar, strengthening haven appeal and bringing the US currency up from multi-month lows against the euro.
• In addition, the greenback found support as data showed that US consumer sentiment eased in October, disappointing market expectations.
• One analyst stated that if the pound can bounce, then the markets must be wary that the dollar can also. The bounce in the UK currency increases the risk of a broad bounce in the dollar, even if it may only be a short- term reprieve.

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Sterling achieved a three-week high of 1.6297 against the dollar yesterday, supported by upbeat comments about the UK economy.

• The pound jumped nearly three cents, or 1.8%, against the dollar on speculation that policy makers will pause their asset-purchase programme next month as the economy shows signs of recovering from the recession.
• The Financial Times cited Bank of England Markets Director Paul Fisher as saying that the asset purchases scheme may be paused to give the central bank the option “of doing more later.”
• Analysts suggested that it appeared that the Bank of England was letting it be known in more forceful terms that it is not talking the pound down any longer.
• Additionally, the pound benefited from broad dollar weakness as optimism about the global economy and buoyant earnings from Goldman Sachs and Citigroup encouraged investors to move into currencies seen as being higher risk.
• Data also revealed that US jobless claims dropped by another 10K week-on-week, and that the inflation figure increased to 0.2%, both of which beat market expectations, lessening demand for the haven currency.

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The pound was able to reverse a four day slide against the kiwi yesterday, following positive data in the UK labour market.

• Figures showed that fewer than expected Britons claimed for unemployment benefit month-on-month in September, and the overall unemployment rate held steady at 7.9%, beating market expectations of a rise to 8.0%.
• The kiwi also suffered after some investors turned bearish following weak US retail sales, which fell in September by the largest amount in 2009, driven by a fall in car sales at the end of the country’s scrappage scheme.
• The pound was able to reach up over 2.17, but in a market that remains broadly bearish towards the pound, the kiwi trimmed its losses, with the price closing at 2.1600.
• The New Zealand dollar has climbed again this morning, supported as stronger-than-forecast inflation data raised the prospect of an interest rate rise sooner than expected.

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The pound rebounded nearly two cents from its intra-day low against the aussie, halting its sharp slide and posting marginal gains of 0.2%, to close the day up at 1.7912.

• The Australian dollar has rallied strongly over the past two days following the surprise rate hike, but the aussie pulled backed yesterday as risk sentiment in the market dissipated.
• The high-yielding currency backtracked as equities took a downward turn and as investors sought defensive positions ahead of important statements in the UK and EU today.
• Additionally, analysts noted that market players may have over-bought the aussie, realising that it was only one central bank to raise rates and that similar moves from other nations may still be some way off.
• In trading today however, the Australian dollar’s upward trend has continued, already up 0.8% on the day, as strong employment data reinforced the pace of recovery in the nation.
• Overall unemployment fell to 5.7% in September, an improvement from 5.8% the previous month and beating out market expectations of 6.0%.

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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.

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