The U.K. currency may be experience a shift on its sentiment as speculations suggest that the current quantitative easing measures used by the nation’s central bank will be terminated, as the country starts to publish positive economic reports, suggesting that the recession may be ending in the British Isles.

This week will be decisive for the pound as inflation yearly numbers are due to be published the next Tuesday, and if forecasts will be confirmed, the numbers are expected to surpass Bank of England’s target below 2 percent for the first time in seven months, fueling even further speculations that quantitative easing measures will be lifted in the U.K. anytime soon this year. The 200 billion pounds used for bond purchasing will have their last part of 25 billion to be used by early February, and the next central bankers’ meeting may already bring better news for the sterling if the country’s monetary policy change its direction.

The pound has been suffering from an insistent recession combined with a struggling financial system and ineffective policies taken by the Bank of England to combat the crisis, but as economic data improves, the pound may advance considerably, since it was one of the currencies who lost the most among the main traded ones in foreign-exchange markets last year.

GBP/USD traded at 1.6277 as of 02:20 GMT from a previous rate of 1.6256 when markets closed last Friday.

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The Australian dollar was one of the most affected currencies today as speculations that Chinese lending requirements will slow down the global economic recovery impacted traders’ sentiment, declining appetite for

high-yielding currencies.

The Aussie and the kiwi declined today versus most of the main 16 traded currencies, after one of its main trading partners, China, is likely to reduce property loans after the government set new restrictions for lending money in the nation’s banks, fueling speculations of an economic slowdown and consequently raising risk aversion in trading markets towards the end of this week’s session.

AUD/CAD traded at 0.9502 as of 19:02 GMT from a previous rate of 0.9525 yesterday.

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The euro declined today versus most of the 16 main trade currencies as some of its member countries, specially Greece, are having a hard time to adjust its national accounts, decreasing confidence among investors to inject capital in the region.

Greece’s deteriorating financial situation once again influenced negatively the euro’s outlook as German Chancellor Angela Merkel affirmed that the Southern European budget deficit may hurt the sentiment among investors regarding the common currency, which had been already impacted by Greece’s credit rating when it was downgraded for the second time in a year in late 2009 by Standard and Poor’s. European Central Bank Jean-Claude Trichet also affirmed that the euro’s future remain uncertain, decreasing even further the appeal for the currency, which lost versus the greenback despite weak economic data published today in the United States.

According to analysts, not only Greece, but countries like Portugal, Spain and Italy may threaten the euro’s performance as they also face complicated financial scenarios, with budget deficit’s much beyond the Eurozone members maximum accepted level, which in theory has a limit of 3 percent of gross domestic product.

EUR/USD declined to 1.4478 as of 15:45 GMT from a previous rate of 1.4515 in the intraday comparison. EUR/GBP fell to 0.8878 from 0.8907.

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After several days gaining versus the dollar and the euro, the Norwegian currency slid versus main traded currencies as a bearish day in equities markets and decreased demand for commodities shunned investors from assets in the Nordic country.

The Norwegian krone was affected today as the crude oil, the nation’s chief export, had a decline on its rates after China imposed new lending requirements for banks in the country, affecting markets’ sentiment, consequently impacting stock markets and demand for high-yielding currencies.

USD/NOK traded at 5.6518 as of 19:08 GMT from today’s opening rate of 5.6174.

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Risk aversion declined significantly today after China set a new reserves requirements for banks in the country, allowing the yen to outperform all of the 16 main traded currencies in

foreign-exchange markets, as pessimism surged.

Equities markets in Asia and globally declined today, raising demand for the yen, as China set a minimum of 16 percent of reserves that large banking corporations in the country must have, in order to avoid a credit bubble as the one that caused the global slump in late 2008. The yen is considered the safest refuge in currency markets for turbulent times and benefited from today’s negative scenario, as China’s policy decreased demand for high-yielding assets, which were trading high since the beginning of the year. The Australian dollar posted the sharpest losses versus the Japanese currency as loan approvals in the real estate sector declined.

China’s strict regulations declined optimism that were fueling demand for higher-yielding since the last week, according to analysts. The yen had declined significantly after several sessions losing versus most currencies, as today’s shift in markets sentiment was a good opportunity for it to level up.

AUD/JPY fell to 84.23 as of 15:45 GMT from a previous rate of 85.53 in the intraday comparison. CAD/JPY followed the same trend at 87.72 from 89.08.

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The Swiss currency had its previous week rally versus currencies like the pound and the euro halted today after the national central bank took a position against further advances of the franc, as the current appreciation was considered excessive by SNB officials.

After a rally that lasted during most of the past week trading session, the Swiss National Bank President Philipp Hildebrand stated today that the franc’s fluctuations will be monitored closely, also signaling that policy makers will attempt to prevent further gains for the its currency, as current levels, specially versus the euro, are considered too high. The Swiss franc also advanced considerably last week versus the greenback, as bets that interest rates will be raised in the U.S. declined after negative data was released.

Most of the franc’s advance during the past month were based on speculations that the SNB authorities would take a rather passive policy regarding the currency’s fluctuations, but after today’s affirmations, it’s likely that the Swiss currency will experience a considerable decline, or at least, a rather neutral trend as fears for interventions will certainly count on trader’s sentiment towards the Swiss franc.

EUR/CHF currently trades at 1.4752, 15:52 GMT, from as 1.4722 when markets opened yesterday. GBP/CHF also climbed to 1.6391 from 1.6310.

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In a poor day for the kiwi dollar, the pound rose by over seven cents, or 3.1%, against the kiwi, reaching a one-month high as traders withdrew long positions.

• A slide on Wall Street and on European share indices, led by declines in the energy and banking sectors, accelerated a sharp fall in the “riskier” kiwi dollar.
• This was compounded after data revealed an unexpected fall in US new home sales for September, which, as general sentiment was that the housing sector was on the mend, raised concerns in the market, sapping demand for the kiwi.
• The New Zealand currency was further undermined in the evening, diving two cents, after the central bank dampened expectations of an early rate rise.
• The RBNZ left rates on hold at 2.50% as expected and moved to a neutral bias. But it added in its statement that it expected to leave rates on hold until the second half of 2010, against expectations of a rise later this year.
• In trading this morning, the kiwi has pulled back slightly, though the price remains up around 2.2650.

The single currency slipped back from multi-month highs against the dollar following positive US housing data, with the pair closing the week at 1.5006.

• The US dollar found support after a report showed that US existing-home sales improved more than expected last month.
• Resales of US houses jumped 9.4% in September to a seasonally adjusted annual rate of 5.57 million, the highest rate in more than two years, which stemmed the recent broad dollar sell off.
• Analysts stated that the recent bout of euro strength could now be looking over-stretched, given huge accumulation of short positions on the dollar.
• In addition, the single currency came under pressure at the end of last week after Henri Guaino, right-hand man of President Nicolas Sarkozy said that, “the euro at $1.50 is a disaster for the European economy and industry,” reaffirming the recent sentiment of the ECB.
• However, the dollar has fallen to a fresh 14-month low against the euro in trading this morning after a Chinese central bank researcher called for moving some of the country’s massive foreign reserves into euro and yen holdings, weakening demand for the US currency.

The single currency resumed its upward march against the greenback yesterday, finally broaching the 1.50 mark, to close up half a cent at 1.5015.

• In early trading, the euro retreated from near 14-month highs as some investors bet European policy makers would say they are still concerned that the euro’s strength will harm the economic recovery.
• Analysts also said that the single currency’s sharp fall against the pound weighed on the euro/dollar price, which has recently remained anchored just below the $1.50 level.
• However, the dollar relinquished its gains in the afternoon as rising U.S. equities encouraged enough risk appetite to push the single currency to the highest level since last August.
• In trading this morning, the single currency has once again slipped back as solid data from China gave traders a reason to take profits.
• Analysts have noted, though, that the dollar is likely to continue to broadly weaken as sentiment towards the US currency remains downbeat on the prospect of sustained low US interest rates.

Sterling strengthened as much as 2.2% to a ten-day high of 1.0936 against the euro yesterday, its biggest intra-day gain since Jan 30th.

• Sterling was able to post strong gains following bullish comments from a Bank of England policymaker who stated that quantitative easing is in fact working.
• MPC member Paul Fisher told the Financial Times he felt confident that the bank’s asset purchase programme was ‘having the scale and speed of impact that we would have hoped for when we started,’ back in March.
• Analysts said that the comments were perceived as lessening the chances that the central bank would expand its loose monetary policy at their next meeting in November, which to some extent, had already been priced into the market.
• His comments echoed those made by fellow MPC member, and deputy Bank governor, Charles Bean, who said on Tuesday that as the recovery proceeds, the Bank would need gradually to remove the large monetary stimulus or risk overshooting its 2 per cent inflation target.
• Sentiment towards the pound has remained buoyant in trading this morning, with the pound currently consolidating its positions above 1.09.

The aussie edged higher yesterday as continued strong demand for the high-yielding currency offset positive employment data in the UK.

• The UK currency found early support following better-than-expected employment data that revealed the rate of people claiming benefit allowance was declining.
• However, the news was unable to buoy a broadly weaker pound, with investors continuing to be attracted by the recent rate rise and general positive sentiment surrounding the Australian economy.
• The aussie also took advantage of rallying equity markets, which took their lead from better-than-expected quarterly earnings at JP Morgan reinforcing the notion that economic conditions are improving.
• In the early hours of this morning, the Reserve Bank of Australia chief made a hawkish speech that has provided a boost to high-yielding currencies. The broad dollar sell off that has ensued has prevented the pound from sliding further against the aussie, with the price currently hovering below 1.75.
• Sterling has also received a boost this morning in the wake of positive words from BoE policymaker Paul Fisher who said that he felt confident that QE was working

The Australian dollar continued to push higher yesterday, advancing over a cent as sentiment towards the higher-yielding currency remained positive.

• Commodity currencies, such as the aussie, made progress yesterday in line with stronger prices for oil and metals.
• Rallying global equity and commodity markets encouraged the rise in risk appetite in the market, which heightened demand for the aussie dollar.
• In the UK, the market still holds the view that further quantitative easing could be announced in November, which has put substantial pressure on the UK currency as other major economies look to wind up stimulus measures.
• In trading this morning, the pound has halted its steep decline, with the price currently flat as a weaker-than-expected business confidence survey stemmed demand for aussie assets.

The aussie climbed a further two cents yesterday as figures revealed rising employment in Australia, and as rising risk appetite supported strong demand for high yielding currencies.

• The Australian dollar continued to push higher as encouraging data from the labour market gave investors further cause to buy into Australian assets.
• The recent rate hike to 3.25% has increased the yield gap between the two currencies, and the recent downturn in unemployment has simply reinforced the sentiment that Australia is at the forefront of the global economic recovery, strengthening aussie demand.
• Additionally, gold prices pushed record highs for the third straight day yesterday, which supported demand for the commodity driven aussie dollar.
• The pound has slipped below the 1.77 mark in trading this morning, though its rate of decline has slowed following comments from Ben Bernanke
• The Fed Chairman spoke of the possibility of tightening the US monetary policy which has led some investors to trim their long positions in the aussie dollar.

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%.

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.
• In trading today investors will be listening carefully to both the MPC and ECB’s respective rate statements for clues to future rate movements.
• Both central banks are expected to keep interest rates at record lows, however analysts have noted that the BoE, in light of recent economic data, may hint at extending their asset purchase scheme before the year’s end, which could greatly weaken the UK currency.

The single currency made strong gains yesterday as the dollar came under pressure about its future status as the chief currency used in oil trades.

• The single currency broached two week highs as a report came through that Arab States were in secret discussion to find alternatives to using the dollar in oil trades.
• Major oil-producing countries have denied the report, but markets reacted strongly to the news, which has added fuel to arguments that the US currency’s global status is coming under pressure.
• Analysts noted that the dollar’s sharp fall was a good example of poor sentiment toward the US currency being vulnerable to speculative selling.
• Rallying equity markets encouraged further dollar selling, with risk appetite in the market diminishing the appeal of the haven currency.
• Risk was also high following the Reserve Bank of Australia’s relatively unexpected rate hike, which spurred demand for high-yielding assets, lending support to an upward movement in the euro/dollar price.

Sterling relinquished gains against the kiwi dollar on Friday, as concerns mounted over the strength of the global recovery, with the price closing the week at 2.2269.

• Following the release of worse-than-expected jobs data in the US, risk adverse investors bought into dollar and yen havens on Friday, weakening the higher-yielding, ‘risky’ assets.
• However, the kiwi rebounded strongly in afternoon trading, as investors turned bearish in their sentiment towards the US recovery.
• The weak employment data added to concerns that the US recovery is struggling to take hold, and, after an initially flurry of dollar buying, many investors opted against the relative ‘safety’ of US assets.
• In trading this morning, the price has dropped back below 2.22 as the New Zealand currency tracked the strength of its aussie counterpart.
• Heightened speculation of an imminent rate rise in Australia has supported higher-yielding currencies this morning, and the kiwi could find further support as investors await expectations of improved New Zealand business confidence in a survey released today at 22:00BST.

The single currency hit a two-week low against the greenback yesterday as a rise in risk aversion strengthened demand for the haven currency.

• The dollar rose for a second day as evidence that economies have yet to shake off the worst effects of the global recession spurred demand for the safety of the U.S. currency.
• Russia’s central bank cut its main interest rate, signaling that things are not as positive as they appeared previously, and spurring demand for the dollar.
• The greenback also found support following a disappointing US consumer confidence survey, which cautioned investors in their risk appetite.
• Comments from ECB President also weighed on the euro, with Trichet saying that he was in favour of the argument for a strong US dollar in the foreign exchange markets.
• The remarks were reflective of a concern regarding the strength of the single currency on the eurozone economic recovery.
• This morning, the single currency has stretched back over 1.46 as risk sentiment returns to the market, diminishing demand for the dollar.

Sterling slid for the third consecutive day against the Australian currency yesterday as the pressure of recent events and statements continued to weigh heavily.

• The aussie pushed higher, gaining another 0.9%, as the pound failed to shrug off comments made last week that a weak currency was in keeping with the BoE’s policy.
• The aussie dollar was also supported from a rise in commodity prices, particularly gold, which rallied back above $1000 per ounce yesterday.
• Additionally, risk sentiment among investors returned as stocks in Europe and the US traded strongly, buoying demand for riskier assets.
• In trading this morning the aussie has continued to advance, supported by renewed talk that the Reserve Bank of Australia would start raising rates in November.
• The speculation came after a central bank watcher said the RBA was almost certain to hike rates by 25 basis points in both November and December, which would make the Australian currency an even more attractive bet for investors searching for bigger returns.