QROPS News from Gerard Associates

QROPS update 10th March 2011 Pension Foreign exchange QROPS and QNUPS

Submitted by administrator on Thu, 10/Mar/2011

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).

 

Wednesday saw UK trade deficit narrow in January to its smallest in nearly a year, which was largely put down to record exports of oil which helped drive a recovery from the worst reading on record in December. This helped sterling climb 0.3% against the Euro hitting a high of 1.1676 before retracing and spending most of the day around the 1.1650 level.

This improvement will help provide some relief to policymakers who were hoping that the trade deficit will help spur on the economic recovery. Britain’s goods trade deficit narrowed to £7.03bn in January from the poor £9.69bn in December, Economists had forecast a more modest fall to £8.5bn. Economists did however caution that the monthly trade figures were always volatile and December’s worst ever recording was largely caused by the severe weather that caused so many disruptions.

“Today’s number is encouraging bit there is clearly a lot of short term volatility in these figures” said an economist at RBS. “The underlying positive is still that trade is making only a relatively modest contribution to GDP growth”

Elsewhere the Euro weakened as the cost of insuring against a default in Portuguese government debt rose to its highest level since January as well as Greek unemployment hit a record high. This caused EUR/USD to fall back to a level seen last week before Jean Claude Trichet came out with his “strong vigilance” a comment used throughout 2005-2008’s rate tightening cycle which paved the way for rate increasing at the next meeting. EUR/USD fell to a level of $1.3856 as a result.

In recent months the Euro has pushed higher on the back of interest rate expectations, the debt crisis is starting to remerge but if we are being honest it never really went away it was just brushed under the carpet.

As a result of the European debt problems this has seen dollar strengthen, causing GBP/USD to fall to a level of $1.6140, the main question will be is if the dollar can maintain the move?

A lot of economists think the prospect of Fed rate expectations is a long way away compared to the UK and Europe and predict this could cause dollar weakness in the coming months.

 

IN THE UK

  • UK Trade Balance narrows to £7.03bn compared to predicted £8.5bn predicted.
  • Sterling rallies against the euro to hit a level of €1.1671, then retraces spending remainder of the day in the €1.1650 territory
  • All eyes are on the MPC rate decision out today, economists predict no change at 0.5%
  • GBP/USD falls to $1.6140 as dollar enjoys strength as Euro weakens
  • This morning UK industrial and Manufacturing Production both print better than expected figures.

 

ELSEWHERE

  • Euro debt concerns weigh heavily on the single currency causing it to fall across the board.
  • US Wholesale Inventories increase 1.1% helping the dollar’s recovery.
  • German industrial production for January rises 1.8%.
  • Investors feel prospect of a US rate hike is a long way off, which could cause dollar to weaken in coming months.

 

DATA TO LOOK OUT FOR

  • Bank of England’s interest rate decision, no change is predicted to current policy.
  • At 1.30pm US Trade balance is expected to come in -$41.40bn, the deficit is expected to rise as imports rise.
  • US initial jobless claims due out at 1.30pm is expected to come in at 368k .

 

Current Spot Rates (9.00am)

10th March 2011

 

 

 

 

 

 

USD

EUR

AUD

CAD

CHF

SEK

ZAR

JPY

GBP

1.6143

1.1669

1.6071

1.5642

1.5049

10.29

11.12

133.788

USD

 

1.3833

0.9955

0.9690

0.9322

6.37

6.89

82.877

 

 

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

QROPS update 8th March 2011 Pension Foreign exchange QROPS and QNUPS

Submitted by administrator on Tue, 08/Mar/2011

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).

 

Sterling slumped to a 5 week low €1.1577 against the euro on Monday, as the battle as to who will increase interest rates first continued to sway investors towards euro buying.

Yesterday was a fairly quiet day for key data release, however ECB President Jean Claude Trichet reiterated that they must do whatever necessary to avoid further inflation effects which supported the single currency. This comes after Trichet’s shock comments on Friday in regards to the euro zone increasing their interest rates as early as next month.

Sterling has been performing strongly so far this year, however setbacks such as Q4 GDP figures amongst weak services sector data have caused investors to ease on their positive

Sterling outlook for the time being, and with the BoE falling 2nd to the ECB in the Rate Hike story, sterling is suffering.

The overnight interest rate swap market is pricing in a 25 basis point UK rate rise from a record low 0.5% in June or July, having shifted from May or June. One additional hike is fully priced in by the end of the year.

However up until yesterday afternoon the pound’s performance is still fairly positive against the dollar, nearly breaking through the 13 month high $1.6341 hit last week. Traders said its inability to extend gains beyond a 13-month high had lured some sterling sellers, including Middle Eastern names, into the market. After sterling’s failure to break resistance, it spiralled down as low as $1.6180, a 1 week low.

 

Interest Rate Expectations against Risk Appetite

 

The dollar usually opted into during times associated with risk, seems to have been dumped of recent as the interest rates in the US don’t seem like they will be hiked anytime soon, and recent economic data has been fairly weak. Interest rates now seem to have been the main factor influencing investor’s decisions, and risk associated trading has taken a back seat for now.

While rising tension in the Middle East and North Africa have sent crude prices skyrocketing, as well as hurt developed market equities, the US dollar has failed to benefit from this rise in risk aversion. This has many questioning the greenback’s status as a safe haven.

When Israel announced that Iranian ships would travel the Suez Canal, the EUR/USD rallied and similarly, when Egyptians were demanding the resignation of Hosni Mubarak, the EUR/USD strengthened, and then sold off after he stepped down.

The Swiss franc and Japanese yen have also acted as important safe haven currencies recently.

 

Summary:

 

IN THE UK

  • Sterling weakens against the majors, in particular from $1.6341 to a 1 week low $1.6180 against the US dollar and €1.1577, a 5 week low against the euro
  • MPC member Andrew Sentence stands down in May, being replaced by fellow hawk, Ben Broadbent, investors wait to see his stance.
  • UK rate hikes now look likely to be for June or July rather than May which was previously predicted
  • UK BRC Retail Sales Figures show a 0.4% decline is sales in shops open more than a year, January’s figures showed a rise of 2.3%
  • The latest RICS survey shows that the number of surveyors that think UK house prices are falling continues to outnumber those who don’t.

 

ELSEWHERE

  • ECB President Jean Claude Trichet reiterated that they must do whatever necessary to avoid further inflation effects.
  • Greece hit back against Moody’s ratings drop, saying it is completely unjustified and puts them below Egypt
  • The euro zone could increase rates as early as April, putting them in front of the UK in the battle to increase rates
  • Markets are beginning to take the view that risk appetite is playing “second fiddle” to interest rate expectations. Despite global unrest and rising oil prices, the US dollar is failing to make gains against the euro. The euro on the other hand has seen support and hit a 4 month high of $1.4035

 

DATA TO LOOK OUT FOR

  • Another fairly limited day includes German Factory Orders at 11.00
  • ECB members Weber and Nowotny speak this morning.
  • At 1.15pm Housing Starts data in Canada is released, this is a good gauge of the Canadian housing market and could influence CAD value
  • UK BRC Shop Price Index for February is released tonight at midnight.

 

Current Spot Rates (9.00am)

8th March 2011

 

 

 

 

 

 

USD

EUR

AUD

CAD

CHF

SEK

ZAR

JPY

GBP

1.6194

1.1616

1.6005

1.5752

1.5115

10.28

11.14

133.510

USD

 

1.3938

0.9883

0.9727

0.9334

6.35

6.88

82.444

 

 Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

QROPS update 14th February 2011 Pension Foreign exchange QROPS and QNUPS

Submitted by administrator on Mon, 14/Feb/2011

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).

 

Sterling started Friday’s trading up against majority of its trading pairs, but these gains were short lived as speculation stalled with regards to the Bank of England increasing interest rates as there was a significant absence of clarity on the banks rate stance which was released on Thursday. The minutes from Thursday’s meeting will be released later in the month and it will show how the votes were cast for a rate hike and how close the bank really is to raising borrowing costs from the current record low of 0.5% which has not been changed since July 2007, as inflation pressures continue to mount.

Investors keenly await the release of the inflation report due next Wednesday where they will hopefully be able to gauge the Bank of England’s next move. Analysts may argue that signs of a pickup in inflation may not necessarily be positive for the pound. In addition to the inflation report we will see the release of UK consumer prices, retail sales and employment which will determine the pounds next moves.

Bank of England Governor Mervyn King has dismissed inflation risks as temporary, saying government spending cuts and slower than estimated economic growth will curb price pressures. Britain’s government has lowered spending and increased taxes to reduce the fiscal deficit from the estimated 10% of GDP in the year through to March.

The pound reached a day’s high of €1.1868 against the euro in the morning but by afternoon trading had fallen to a low of €1.1800. Sterling did not fare any better against the dollar as it fell from the high of $1.6111 to reach the day’s low of $1.5965 which was last achieved in late January.

The pound lost 0.6% against the dollar on Friday and has declined 0.7% this week but it must be noted overall this year it has advanced 2.5% against the greenback.

The UK released strong Producer Price Index data which showed input prices rose 13.4% on the year in January which was well above forecasts of 12.6%. It does highlight the on-going increase in inflation within the UK.

Risk aversion also continued within the markets as investors returned to the safe haven of the dollar amidst the increased political uncertainty in North Africa and the Middle East.

The US Thomson Reuters/University of Michigan index of consumer sentiment rose to 75.1 its highest level since June, from 74.2 in January.

 

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

QROPS Update 9th February 2011 Pension Foreign Exchange Report QROPS & QNUPS

Submitted by administrator on Wed, 09/Feb/2011

We continue our daily look at factors affecting currencies allowing some insight into market conditions affecting exchange rates. Cash and income timing for UK Pensions and QROPS should be considered to maximise the Pension, QROPS and investment income and benefits taken.  

Investment market volatility and currency exchange remains a challenge. Things are still very volatile and we are in unique global influencing territory.  In conjunction with investment returns, currency exchange continues to concern many expats with UK Pensions, QROPS and now QNUPS.

Sterling’s recent gathering of strength ground to a halt yesterday, reversing gains made over the past few days, after more banking issues dented investor sentiment.

Britain’s banks were on the receiving end of an £800million tax bill, after the UK

Government increased the levy on banks to £2.5billion. The Bank Levy is an annual tax of 0.075% on the value of all of the debts of the UK banks (including money deposited with the banks), except that;

 

  • Ordinary deposits covered by the UK’s deposit insurance scheme are exempt.
  • The first £20bn of any bank's taxable debts is exempt
  • The banks only pay half the tax rate on their long term debts

 

The 0.075% rate applies only from May this year. Originally, the Treasury had planned to charge a lower rate of 0.05% during 2011 but in February it changed its mind. The government thinks it will discourage banks from relying on risky forms of borrowing, which were blamed for making the 2008 crisis much more dangerous.

The bank levy announcement put the equity market under pressure and it's taken the steam out of sterling today," said a senior currency strategist at BNP Paribas.

"We think sterling's going to struggle now given the extent of the rate hikes that have been priced in. Things are swinging back to sterling reacting to more to negative news," they said.

Sterling lost around a cent against the Euro from around €1.1873 to a session low €1.1757. This comes after reaching a 2 week high €1.1918 on Monday. Against the dollar sterling fell from a day high $1.6161 to a low of around $1.6029.

The Bank of England Interest rate decision looms on Thursday, however most analysts’ views are that rates will remain where they are and the focus will be on next weeks inflation data and quarterly Bank of England inflation report for any clues to the timing of future monetary tightening. Markets are pricing in a rate hike in May, though they see an 18% chance of a hike on Thursday. This has led to a build-up of long speculative positions in the pound.

House prices in England and Wales fell in January but the pace of decline eased for

a third consecutive month. The Royal Institution of Chartered Surveyors' seasonally adjusted house price index rose to -31 from -39 in December, its highest level since July and far better than the consensus forecast of -38.

British retail sales bounced back in January after a snow-hit December, driven by discounts and a rush to beat the VAT sales tax rise in the first few days of the month.

The British Retail Consortium said like-for-like retail sales were 2.3% higher in January than a year ago, the strongest annual rate of growth since March.

 

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pensions, investments, currency exchange and guidance on taxation in most popular ‘sunnier’ climates.   This with the re-assurance and security of UK authorised and regulated advice – essential tools for your security.

 

 

 

QROPS update 4th February 2011 Pension Foreign exchange QROPS and QNUPS

Submitted by administrator on Fri, 04/Feb/2011

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).

 

The day started off with Euro around €1.1730 and US dollar around $1.6270, but by the end of the trading day things had changed and reversed previous movements, particularly on the dollar which dropped back below the $1.62 mark.

The ECB kept key interest rates on hold at 1% for February, and the Euro began to weaken as December’s retail figures showed a decline of 0.6%, the figure was expected to come out at +0.5%. The market is blaming poor weather conditions in the lead up to Christmas for this fall.

Jean Claude Trichet’s speech continued to weaken the Euro, pushing it over €1.18 as he stated inflation risks are “broadly balanced”. He continued to say rates “still remain appropriate” but that “very close monitoring is warranted”.

Andrew Sentence, who leaves his post in May 2011, hinted that we might see a move in interest rates in the UK by 25 – 50 bases to keep rates in line with the high inflation we are currently experiencing, boosting the pound to a 3 month high against the dollar.

UK services PMI was released at 9.30am. The figure came out at 54.50, beating expectations of 54.0 and was greatest climb in 8 months. UK construction also expanded in January, as the weather improved. Building activity rose to 53.7 from

49.1 in December, beating the forecasted figure of 49.5. The reading was the highest since September 2010, confirming the 10th out of the last 11 expansions. CIPS commented that not only did better weather conditions help boost construction but also gains in new business.

 

In the afternoon the dollar rallied across the board as US ISM non-manufacturing report printed at 59.4 versus 57.20 as expected. Over the course of the day the dollar gained over 100 points against the Euro, and also the Great British Pound, making up for its losses early on in the week.

With little date due for release today, the market will be focusing on the non-farm payroll figure for January. We are expecting a figure of 145,000 proving that the US hiring market is picking up steam.

 

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

 

 

 

 

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