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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 <?xml:namespace prefix = st1 />UK

• Sterling initially rose against the euro yesterday after Greek politicians struggled to agree on bailout terms which increased concern over the sovereign debt crisis and made investors return to safe haven assets, the pound rose from the session low of €1.2033 to reach the high of €1.2099..
• Sterling initially lost ground against the US dollar in early trade but retraced its losses in the afternoon moving away from the low of $1.5729 to end the session near the high of $1.5840.
• Concern mounts that even though the UK has seen a recent run of stronger-than-expected economic data which has supported sterling, this may be not be enough to dissuade the BoE policy members from announcing an increase in QE at their monthly policy meeting on Thursday.  

ELSEWHERE

• The deadline set for the Greek government yesterday to agree terms of a second bailout was missed. They must now give a decision before Eurozone finance ministers next meet. Despite missing deadlines the euro continues to find support and a new “final” deadline still seems to be next Monday, if we don’t have progress by tomorrow a break below $1.30 against the US dollar seems likely.
• French President Sarkozy and German Chancellor Merkel presented a united front yesterday, proposing the setting up of an account for Greece’s interest payments to guarantee lenders are paid in full.
• Moody’s investor services said that the outcome of the EU summit in January failed to encourage an improved outlook for the Eurozone and highlighted the risk for contagion as the region faces additional credit rating downgrades in 2012.
• The ECB are expected to maintain a dovish stance at its monthly rate decision meeting held on Thursday as speculation mounts we may see another interest rate cut.
• A Eurozone recession could almost halve Chinese growth this year, according to the IMF Chinas economy will grow by 8.2% this year but warns a recession in the Eurozone could cut this to 4.2%. Beijing should get ready to inject billions of USD into the economy to fend off any downturn. .
• BOJ Shirakawa has commented saying that current deflation and the Yen strength are very ‘severe’ and that steady policy needs to be implemented by investigating economic conditions.
• JPY weakened for the third time in four days against the dollar and euro as government data showed Japan carried out so called stealth intervention to weaken the currency in November, Japanese Finance Minister Jun Azumi said he won’t rule out any options to curb the currencies appreciation.
• In late trade yesterday the US dollar weakened significantly, falling over a cent to 1.3136 against the euro, a fall mirrored against the pound. Reports surfaced that the US debt situation is ‘Very Serious’ and ‘Crisis Mode’ could develop quickly.
• Perhaps the most surprising news of the last 24hrs is Australian central banks decision to leave interest rates on hold at 4.25% at 3.30am (GMT) this morning. With less than ideal employment, retails sales and housing market conditions, the markets were fully expecting a drop to 4.0%. The drop never emerged and AUD has strengthened by up to 1.0% against all of the majors pairs. GBPAUD now trades at 1.4650 and AUDUSD is just under 1.08.

DATA TO LOOK OUT FOR (all times GMT)

• Another fairly quiet day of data today and markets again will be driven by developments in the Eurozone.
• Germany release industrial production at 11.00am which is expected to rise for both MoM and YoY.
• The US releases consumer credit change for December at 8pm this shows the amount of money that individuals borrow, this is expected to fall to $7.30B from $20.37b previous.
• Meanwhile, in the absence of US data today, the only key event in the US is Federal Reserve Chairman Bernanke’s testimony to the Senate Budget Committee. We expect him to maintain the Fed’s dovish tone regarding the US economic outlook, despite the stronger than expected January non-farm payrolls.  
• At 11:30pm Australia releases Westpac Consumer Confidence for February.

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).

IN THE <?xml:namespace prefix = st1 />UK

• Producer Price Index figures on Friday morning in the UK showed a fall in prices that manufacturers buy and sell at. The pound was left mainly unaffected after the announcement but values fluctuated later on as overseas developments took place.
• During the course of the day the pound made gains versus against the euro as rumours circulated trading floors that several Eurozone nations would be downgraded, GBPEUR rallied back through the psychological €1.20 mark to hit a high of €1.2091 late in the evening.
• GBPUSD didn’t fare so well, falling to a 18 month low of $1.5234 tracking a fall in EURUSD as concerned investors head to the reassurance of the safe haven currencies.     
• George Osbourne will sign a deal today with Hong Kong to help the City of London become a offshore trading centre for the Chinese Renminbi.

ELSEWHERE

• The main news last week was S&P’s decision on Friday to downgrade the credit ratings of 9 Eurozone member states, the most notable of these were France and Austria being downgraded from the top tier AAA rating.
• Concerns now surround the European Financial Stability Facility as France and Austria’s downgrade mean the fund could lose its own AAA rating and potentially  €180bn of lending capacity.  
• Sentiment over Europe had started to improve last week and bond auctions went well, EURUSD had risen sharply to a high of $1.2874 before losing over 2 cents to fall to $1.26342 ahead of the S&P announcement.
• Adding to Eurozone woes were threats of a Greek default increased after talks to restructure the country’s debt broke down. Negotiations failed over the size of the haircut to be taken by banks.
• Following the French downgrade, EURJPY hit a fresh 11 year low of 97.15yen, the euro under obvious pressure and yen benefiting from it’s safe haven status being both contributing factors.  
• In the US, some of the optimism about housing, consumer spending and the broader economy eased back a bit last week, amid a splattering of weaker economic reports. Retail sales rose just 0.1% in December and core retail sales fell by the same amount. Holiday sales came in right in line with expectations, rising 5.1%.
• US weekly first-time jobless claims spiked up to 399,000 and job openings listed in the JOLTs survey fell slightly..
• Former MoF official Sakakibara (aka Mr. Yen) expects that Japan could be downgraded soon; Strong Yen is likely to continue, however any intervention in the market would most likely be unsuccessful without the help of the US.

DATA TO LOOK OUT FOR (all times GMT)

• A relatively quiet day for data today, markets will be accessing the fallout from Friday European downgrades and how they will affect the Eurozone crisis.
• Eurozone President Draghi speaks this evening at a press conferences with Q&A, he will undoubtedly face many questions about the severity of the downgrades and how they affect the EFSF.  
• Business Confidence Figures are released in New Zealand tonight at 9.00pm

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).

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.