Brussels

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 gained against a broadly weaker euro on Monday, ahead of an EU summit in Brussels, with investors cautious as talks continued between Greece and private creditors on a debt swap deal.  The pound pushed up from a day low 1.1901 to a day high 1.1974.
• Sterling fell against the dollar, tracking falls in EURUSD after a run of gains that have taken the pound above $1.57 from below $1.54 in mid-January. Traders and analysts saw levels above $1.57 as a good opportunity to take profit on those gains, which sterling fall to a day low 1.5654. 
• Sterling may come under pressure later this week if purchasing managers' surveys (PMIs) for January on the manufacturing, construction and services sectors add to the picture of a weakening economy and increase the prospect of more monetary easing from the Bank of England.
• Overnight GFK Consumer confidence gave Sterling a boost, as the figure showed an improvement to -29 in December, from -33 in November.  Sterling moved up from 1.5700 to 1.5774, its highest since November 21st after the data release.

ELSEWHERE

• EU chiefs arrived in Brussels yesterday to put the finishing touches on a German-led deficit-control treaty and to endorse the statutes of a 500 billion-euro ($656 billion) rescue fund to be set up this year.
• European finance officials began discussions on Sunday that a deal that Greece and its private creditors expect to complete in the coming days, after bondholders signalled they would accept government demands for a bigger cut in their debt holdings.
• European leaders failed to finalise Greece’s second aid programme because talks with banks over debt reduction aren’t completed, German Chancellor Angela Merkel said.  The Euro fell from a day high 1.3185  to 1.3076 against the dollar as investors sought safe haven currencies
• German Consumer Price Index figure for January showed a negative figure compared to December.  The -0.4% was down from 0.7% in December, but was slightly better than the estimated -0.5% expected.
• This morning German retail sales were significantly down, the figure was expected to be a positive 0.8%, however Decembers figure showed a -1.4% decline which was worse than the -1% recorded in November.
• US stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as European leaders sparred with Greece over a second rescue program.  Some investors believe “The question isn’t whether or not Europe goes into a recession, but how deep that recession is going to be,”
• An index of executive and consumer sentiment in the 17- nation euro area rose to 93.4 from a revised 92.8 in December, the European Commission in Brussels said today. That’s the first increase since February 2011, though it’s less than the median prediction of 93.8.
• The yen strengthened against all of its major counterparts as concern increased Greek bailout negotiations will hinder efforts to resolve the financial crisis, boosting demand for haven assets.  The yen appreciated 1.2 percent to 100.15 per euro at 10:08 a.m. in New York and touched 99.99, the lowest level since Jan. 23.

DATA TO LOOK OUT FOR (all times GMT)

• At 10.00am European Unemployment rate is expected to show a slight increase from 10.3% in November to 10.4% in December.
• At 3.00pm US Consumer Confidence figures for January are expected to show an improvement from 64.5 in December to 68.0

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

• UK PMI Services data surprises the market coming in above consensus, the printed figure of 52.1 moved up from 51.3 last month.
• On a less positive note BRC ‘like-for-like’ sales decline to -1.6% (YoY) in November, the British Retail Consortium said consumers are keeping a tight rein on their spending, despite Christmas being so near.
• With high street sales falling, economists are concerned that the risks are great enough to push the UK economy back into recession.
• The pound had a mixed day against the dollar, initially seeing gains in the morning rising through the day to hit a high of $1.5708 before falling to $1.5636 during the US session.
• Against the euro, the pound had a relatively quiet day, progressively rising to hit a high of €1.1661 from a morning low of €1.1627.
• The UK housing market continued its bumpy ride as prices fell 0.9% between October and November, according to figures from the Halifax. There has now been an even split of monthly price rises and falls this year with five of each and one month of no change. House prices in the three months to November fell by 0.6% compared than in the preceding three months.

ELSEWHERE

• The euro started the morning well as investors decided to take a ‘risk on’ stance because headway was made in negotiations over the Eurozone debt crisis, EURUSD rose to $1.3482
• German Chancellor Merkel and President Sarkosy have agreed to restructure the way private sector involvement in Eurozone debt is handled and announced a plan to keep a tighter rein on member state’s finances to avoid spiralling debt issues in the future.
• The European Stability Mechanism (ESM) plans have been moved forward, the fund should be in place by the end of 2012, 6 months early than previously expected.
• The plans will be put to vote at the European Union meeting in Brussels at the end of this week and hopefully will pave the way to finalising the crisis without a breakdown in the euro.
• Italian Prime Minister Mario Monti announces a €30bn austerity package plan to cut debt. The markets responded positively to the announcement, Italian 10 bond yields fell below 6% for the first time since October.  
• Despite the positive start to the day, risk aversion was given a big knock in the afternoon as credit ratings agency S&P put 15 countries within the Eurozone on CreditWatch, this includes all Triple A rated nations and caused EURUSD to lose the mornings gains and finish at $1.3382. German and France despite leading the way on the negotiations were included and have been given a 50/50 chance of being downgraded within 90 days.
• The first of the Central Bank interest rates decisions this week was published overnight with Australia cutting interest rates by 0.25% to bring them down to 4.25%, the move was largely expected and has no significant effects.  

DATA TO LOOK OUT FOR (all times GMT)

• Eurozone Q3 GDP figures are released at 10.00, this is the final print and the markets are expecting the figure to remain at 0.2% as seen in the previous release.
• At 11.00am German Factory Orders are published, after a disappointing -4.3% released in September, analysts are expecting a much better 1.0% for November.
• Building permits are released in Canada at 1.30pm
• The Bank of Canada decide on their interest rates at 2.00pm, they are expected to remain on hold at 1.0%
• Again in Canada at 3000pm is the Ivey Purchasing Managers Index for November will gives an indication of business condition in Canada.

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 Pound began Wednesday in negative territory as traders awaited the release of the minutes from the Monetary Policy Committee’s meeting in July.  The information emerged at 9.30am and in the space of forty five minutes, Sterling had managed to claw back the majority of the ground that it had surrendered earlier in the day. 

The minutes read that the MPC voted seven to two in favour of holding rates at 0.5% for the second month in a row.  Spencer Dale and Martin Weale sided together again to raise rates to 0.75% and Adam Posen repeated his opinion from last month, to increase the Bank’s quantitative easing programme by £50bn to a total of £250bn.  The voting pattern came as no real surprise as the MPC has been split on monetary policy for some time.  The reasoning behind the majority feeling that there was no requirement for a near term tightening of policy was a result of recent soft data releases.  Once again the statement outlined that the economic policy continues to be caught between a rock and a hard place as the threat of a rise in consumer price inflation is expected to push above 5 % in the coming months.

“The most notable omission was the lack of any real mention of the governing council mulling further measures to support the economy through its soft patch, by printing more money to expand their asset purchases.  At present, the governing council seems unwilling to artificially support the economy further,” remarked a researcher at DailyFX.

The market expects any rises in interest rates to occur at the end of this year (at the earliest) with the majority consensus being with further into 2012.  Howard Archer, chief European and UK economist at HIS Global Insight, said:

“On balance, the minutes reinforce our view that the Bank of England will hold off from raising rates until the second quarter of 2012 and will only re-engage in quantitative easing if the economy sees sustained very weak activity.”

In Europe, all eyes are now on Thursdays’ summit in Brussels.  However, as usual the members do not appear to be singing off the same song sheet.  European Commission President, Jose Manuel Barroso stated that the minimum the summit must achieve is to provide clarity on measures to ensure the sustainability of Greek public finances.  Chancellor Merkel is of the opinion that private investors should contribute to any aid package by agreeing to roll over loans they have made to Greece.  The European Central Bank disagrees, arguing that such a rollover would constitute a default in the eyes of the international credit ratings agencies and a knock on effect would undermine investor confidence and the Euro itself.  The EU and the IMF have been discussing a second aid package for Greece, expected to be a similar amount to the €110bn package agreed last May.

Over in the States, the Greenback’s cause was not helped by a worse than expected Existing Home Sales data.  Traders are looking to a positive number from tomorrow’s Philadelphia Fed Manufacturing Survey to see some much needed support for the US Dollar.

IN THE UK

• BoE votes 7-2 to keep interest rates on hold at 0.5% with Adam Polsen voting for further quantitative easing to be added totaling £250bn.
• Sterling edges higher as speculative short positions are trimmed.
• No explicit mention of further mulling of QE in Bank of England’s minutes apart from Adam Polsen’s vote.
• Minutes outline the likelihood of inflation pushing over the 5% in the near future and solidifies the expectation of Interest rate not be raised until 2012.

ELSEWHERE

• Negative Existing Home Sales data adds to the USD retreat against GBP allowing Sterling to hold above the key $1.61 level.
• European Consumer Confidence figures are less than expected, yet Euro holds firm vs. Sterling.
• French Finance Minister stresses the need for Europe to send a strong message on Greek debt.
• Chancellor Merkel calls for private investors to agree to rolling over loans that they have made to Greece.

DATA TO LOOK OUT FOR

• ECB Summit held in Brussels today, each member has different views of discussion points and outcomes.
• Positive UK Retail Sales data (excluding fuel) Year on year may provide support for the Pound.
• The Philadelphia Fed Manufacturing Survey (Jul) is expected to be positive & could strengthen the USD.
• Purchasing Manager Index Services data from Europe is not expected to help the single currency as a retraction from last month is expected.

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.