Social Issues

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 income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, 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, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

IN THE UK

• GBP/USD saw plenty of volatility yesterday, quickly achieving the day’s high of $1.5594 at 11am from the low of the session seen at $1.5459 at 8am.
• GBP/EUR behaved with much less volatility moving within a range of less than half a cent to close the London session at €1.1650.
• A report by the Organisation for Economic Co-operation and Development (OECD) yesterday suggested a possible £125bn increase to the QE program bringing the total to £400bn. The report also warned that by 2013, unemployment could reach 9% and inflation was expected to fall below the 2% target.
• The British Chamber of Commerce (BCC) had previously projected growth in GDP of 2.1% for next year has now revised it to 0.8%. They expect interest rates to remain at 0.5% until Q4 2012. .
• Sterling performed well against JPY yesterday with a session high of 121.671 after opening at the day’s low of 120.071. 
• Earlier today the UK Nationwide Housing year on year change report revealed a 0.3% increase and a 0.4% increase month on month.

ELSEWHERE

• After making gains yesterday morning, EUR/USD fell during the latter part of the European session and continued to fall to $1.3295 during US trading.
• The OECD report has claimed the contagion risk has now made the Eurozone crisis the biggest single threat to the world economy. Coupled with the lack of a spending-reduction plan in the US the world could be at risk of a “devastating downturn”.
• The BCC’s Chief Economist, Padoan said in an interview that Germany is now at risk from contagion. Adding weight to the on-going proposal that the ECB take more of a direct role in rescuing the Eurozone.
• World economic growth is expected to fall to 4.8% in 2012 from 6.7% this year. Even China is forecast a slowdown to 8.5% in 2012 from 9.3% in 2011.
• Italy continued its auction of sovereign debt yesterday issuing €567m of 12 year bonds with yields touching 7.2%, a significant increase on the 4.5% reached at the last comparable issue. 10 year bonds however saw a subtle decrease from 7.26% to 7.14% but remained above the 7% “danger” line considered to be unsustainable in the long term.
• Italy is now described by the OECD as “entering recession” because government debt at 118% of GDP and an average economic growth rate of just 0.75% over the last 15 years,
• In the US, annualised New Home Sale data was down slightly on consensus, however the monthly figures for October were up 1.3%.
• Japan had a mixed bag of data which showed; unemployment rose 0.4% to 4.5% in October, Overall household spending was up 1% (Year on year) for October, large retailer sales were up 1.2% to -1.4% and perhaps most significantly the Retail trade (Year on year) figures came in 3% higher than the same period last year – a full 1.1% higher than the consensus.
• German CPI data was released almost as expected with year on year maintained at 2.4% and mom for November 0.1% down at 0%. Fortunately consumer confidence was up from 5.2 to 5.8.

DATA TO LOOK OUT FOR (all times GMT)

• At 10.00am Eurozone Consumer Confidence (Nov) is released; this is an important gauge of domestic market sentiment and is expected to remain unchanged from last month. Industrial and Economic Confidence figures, released alongside, are both expected to show declines.
• This morning Italy will attempt to auction off more 2 and 10 years bonds, traders are expecting a fairly poor result.
• Eurozone Finance Ministers meet today to continue discussions on Eurozone debt, again traders aren’t expecting anything particularly positive to emerge from the meeting.
• US Consumer Confidence (Nov) is projected to increase significantly at 3.00pm and US Housing Price Index (Month on month) (September) is also released.  

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible 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.

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 income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, 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, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

The hot topic of conversation has been the implications of Moody’s downgrading of

Portugal’s debt rating. The ratings agency has changed the Portuguese rating to that of junk

status. This is causing concern throughout the Eurozone on the back of assertions from the

ECB that they stand by their commitments to assist with Greece’s debt woes so long as at

least one of the ratings agencies hold firm on their classification.

Banking stocks were to blame for all major European indexes showing red by the close of the

day’s session. The sector itself suffered a 1.93% loss. Whilst some argued that the UK isn’t

necessarily vulnerable as a result of the Greek sovereign debt liabilities, one should view the

slide in share price as a reflection of contagion risk, and an illustration of Britain’s

vulnerability over Irish debt.

Sterling improved against the euro slightly over the course of the day, with the exchange

rate moving to a high of 1.1182, approximately a 0.26% improvement; however, the same

cannot be said for the pounds performance against USD, and the pound lost 0.55% falling

from 1.609 to 1.5971. EUR/USD was also punished, with the situation with Greece being on

everyone’s radar; likewise, issues relating to China and her limitation of raw material export,

and the 25 basis point increase to its key policy rate, have brought general strength to the

green back.

The Bank of England are not expected to increase rates, however it is the pricing in of the

ECB’s expected rate hike that has served to suppress the pound of the past week. Jean

Claude Trichet will sit at 12:30 and is expected to increase the key EU rate by 25 basis points.

In other news, the United States posted non-manufacturing PMI data broadly in line with

expectations. The Purchasing managers index came in at 53.3, which was only fractionally

below the 53.9 forecast. Although Purchasing managers price’s loosely reflect changes in

the level of inflation (although not as acutely as consumer price indexes) it is the level of

unemployment in the US which will most captivate the markets interest today.

IN THE UK

• Halifax Housing Index shows an increase in property prices in June. Data shows that property prices exceeded expectations, coming in at 1.2% compared with a potential decline in the average property price from 0.4% to 0.1%.
• FTSE 250 hits highest level in more than four years and yet every European market ended in negative territory with banks doing the damage to levels with the threat of contagion beyond Greece’s immediate neighbours.
• UK construction sector seems primed for consolidation as M&A activity returns.
• Sterling traded up against EUR for the better part of the day, reaching a high of 1.1157.
• This morning shows UK Manufacturing Production in May is better than expected however the pound sees no change.

ELSEWHERE

• The general consensus is that Portugal may be unable to meet its debt reduction targets as set by the EU and the IMF.
• DSK faces fresh charges of rape that may yet hinder his attempts to re-renter French politics.  The consensus is that whilst his reputation remains intact, he has missed the opportunity to compete for the candidacy of the socialist party.
• President Obama rejects the idea of a short term increase of the debt ceiling, claiming that congress must approve package in order to avoid ‘catastrophic’ default.  He is setting a deadline of reaching a deal within the next two weeks.
• European banks and insurers are meeting to discuss revised plan for private sector involvement in Greek debt roll over.  A deal is expected in early autumn.
• USD made fractional gains against EUR moving from $1.446 to $1.4350 levels.
• European Final GDP comes through in line with expectation, without deviation from the 0.8% forecast.
• Italian banks take a thrashing during the European session.  Banks generally down 1.93% across the sector today.
• Australian employment data better than expected last night helps to reinforce the seemingly cast iron Aussie dollar

DATA TO LOOK OUT FOR

• 11.00am, sees German Industrial Production, the figures are expected to show an improvement in May.
• Headline data for today is BoE and ECB interest rate decision meetings, in the UK rates are expected to remain unchanged at 0.5% with no additional QE on top of the current £200bn, but watch out for comments suggesting QE is back on the cards.
• In Europe expectations are for a 0.25% rise after Trichet’s ‘strong vigilance’ comments last month. The markets have priced in expectation of a hawkish tone at the press conference following the decision and the euro finds itself in a precarious position, if the speech does not deliver what is expected the euro will fall.
• US ADP non-farm payroll expected to increase from 38k in May to 66k for June, not quite as important as Non Farm Payrolls but still an important indicator of conditions in the US.
• Insurers stress tests to due to be announced, following the previous release of European banking stress tests.

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible 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.