Canada

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

• Bank of England policy maker Adam Posen spoke last night and said officials will increase their bond-purchase target next month if new forecasts for growth and inflation justify expanding stimulus again. “If we choose to do more in February, which we may or may not, but IF we choose to do more in February, it’ll be because the forecast demands it,” The central bank, which last expanded stimulus in October to £275bn with a program that is due to be completed early next month. 
• GBPUSD continued on a steady rise yesterday but the pound rally stalled at the $1.5600 mark as US stocks erased gains and turned negative in afternoon forcing the pair to stay in the $1.55’s
• Tomorrow, the BoE will publish the minutes of the January policy meeting, revealing how the MPC voted. The Office for National Statistics will release the first estimate of fourth- quarter GDP data at the same time
• The pound remained below the key €1.20 level against the euro and has seen further losses this morning dropping to a low of €1.1918.

ELSEWHERE

• The euro pushed through the $1.30 level against the US dollar yesterday, bolstered by optimism that Greece was set to cut a deal with its private sector investors on a debt swap. Despite no official resolution, the markets are beginning to gain confidence that an agreement will be reached. The main stumbling block at this point seems to be over what coupon creditors will receive on the planned new bonds. Some official say that Greece will pay not more than 3.5%, while creditors are pushing for more than 4%.
• The Greek talks are now expected to be concluded by the end of this week and with a lot of Eurozone data the euro could see more positive movements.
• Although the US Dollar sustained losses yesterday, it consolidated against its leading counterparts in overnight trade.
• Brazil will make room for a more “flexible” monetary policy as the government seeks to ensure economic growth of at least 4% this year. President Dilma Rousseff said he will cut enough of Brazil’s 2012 budget to ensure the government meets its target of a budget surplus before interest payment of 139.8bn reals ($79.7bn).
• Spanish economy minister Luis de Guindos said Spain is sticking to its deficit goal even as the economy shrinks, underlining a rift in the month-old cabinet whether the nation can halve its shortfall during a recession.  De Guindos said Spain’s government has an “absolutely inescapable commitment” to austerity, when asked whether he agreed with Budget Minister Cristobal Montoro’s call on Jan. 22 for the European Union to ease Spain’s 2012 deficit goal to take the shrinking economy into account.
• India’s rupee rose past 50 a dollar for the first time since November as the central bank left borrowing costs unchanged today to support economic growth.  The Reserve Bank of India kept its benchmark rate at 8.50% at 11 a.m. in Mumbai. The central bank cut the cash-reserve ratio for banks to 5.5% from 6%.

DATA TO LOOK OUT FOR (all times GMT)

• A host of flash Manufacturing & Services data from Europe this morning. Both French & German sets of services data have shown a increase in confidence.
• Eurozone Industrial New Orders are released at 10.00amg a contraction of 2.1%.
• UK Public sector net borrowing forecasted at 12.4bn from a higher figure of 15.2bn seen in December.
• Core retail sales in Canada at 1.30pm, they have seen steady sustained growth in this sector in the last three months and are expecting another modest figure of 0.2% growth today.
• Bank of England Governor Mervyn King speaks tonight at 8pm in Brighton.

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 

·         The outstanding event of the day was a unanimous move by the central banks of the US, the UK, Switzerland, Japan, Canada and the ECB agreeing to reduce the interest rate on dollar liquidity swap lines by 50 basis points, immediately after the announcement, sterling moved higher towards a fresh weekly high of $1.5775 against the US dollar.

·         UK policy makers are becoming increasingly cautious regarding the economy as Chancellor George Osbourne insisted that current austerity measured kept the UK ahead of the curve compared to others facing threats from the Eurozone crisis.

·         Speculation mounted that the BoE will resort to a £100-150Bn extension of its asset purchase plan as Quantitative Easing is still the weapon of choice in the face of increasing likelihood of undershooting the 2% target for inflation. 

ELSEWHERE

·         The risks posed by the Eurozone crisis were epitomised by the first ever negative yield for German one year bonds, reaching a low of -0.07% as invested settled for the lesser of innumerable evils.

·         Rumours also surfaced suggesting that the ECB monetary policy meeting on December 8 could see a cut in the current 1.25% interest rates.

·         The Fed claimed the move to reduce rates on dollar swaps would “Ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.”

·         The MSCI All-Country World Index climbed 3.1% by mid afternoon and of the 24 major commodities, only natural gas suffered a decline as markets reacted to the announcement on liquidity. All 16 currencies most traded against the Dollar also posted gains. The indication that central banks are willing to working together may bring some longevity to the resulting risk rally even if the effects were sudden.

·         After initially weakening as Eurofin conceded their bailout fund had been wide of the mark, the euro strengthened 1.1% against the US dollar to close the European session at $1.3465, having peaked at $1.3533 which marked the biggest intraday jump since lenders agreed a 50% write-down of Greek debt.

·         The biggest winners against the US Dollar were the Australian Dollar, which grew 2.7% to $1.0272 and the Brazilian Real, which grew 2.2% to B$1.8078. Canada’s dollar extended gains after data showed the nation’s economy grew at an annualized 3.5% in the third quarter beating the forecasted 3% and overall, the Loonie strengthened to a high of c$1.0187.

·         Early in the day S&P had cut debt ratings on lenders from BoA to Goldman Sachs to UBS but data on US business activity and employment and housing markets topped estimates.

·         The ADP Employer Services report showed companies added 206k, expected at 130k, workers in November bolstering optimism in the labour market.

·         The Chicago Purchasing Managers Index, business activity expanded at fastest pace for 7 months signalling a continuation of the factory-led expansion.

·         Pending home sales were also up, 10.4% in October, recording their biggest gain for 12 months and 5 times the forecast.

·         China contributed to risk appetite as the People’s Bank cut the reserve requirement ratio for banks by 0.5% in order to spur growth. The move shows a reversal in policy which will augment the capital by some Rmb400bn ($63bn). 

DATA TO LOOK OUT FOR (all times GMT)

·         11:30 The BoE Financial Stability Report will indicate how confident the central bank is regarding the stability of the  financial system as it stands and assess the risks it faces.

·         13:30 US Unemployment Claims are expected to number 390k. This indicator of newly unemployed is highly correlated to consumer spending and is therefore of great interest to many market participants.

·         15:00 After the Chicago index read positively yesterday, the ISM Purchase Manager’s Index, also from the States, is expected to follow suit with 

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

• Manufacturing production in the UK rose more than expected in September, rising for the first time in three months, official data showed. It showed to have risen by 0.2% in September, slightly higher than forecasts for a 0.1% rise.
• UK RICS house price balance came in at -24 versus -23 in September and beat expectations of -23, showing an increase in the number of houses sold, potentially sparking some growing realism among sellers as they are more willing to take offers to secure sales.
• Sterling managed to jump to a high of 1.1689 against the euro yesterday and 1.6119 against the US dollar.

ELSEWHERE

• All eyes on Europe yesterday, Italian Prime Minister Silvio Berlusconi failed to win an absolute majority and has agreed to resign, although this will be delayed until after the approval of the austerity plans which is scheduled for November 15.
• This news is alongside recent activity over in Greece which is expected to see the resignation of Prime Minister George Papandreou and the announcement of a new coalition government. Such rapid political changes will surely increase uncertainty over whether the euro area leadership will continue to foster enough of a consensus to keep muddling through the sovereign crisis.
• A quiet day yesterday in America saw the USD under modest pressure, especially against the JPY.
• EUR/USD hit a high of 1.3846 and a low of 1.3724. Risk certainly seems to be switched “on” in spite of the considerable uncertainty in Europe. The FX market and the S&P currently both suggest that the market is actually responding and trading in a very risk positive way, although this can be derailed by risk negative news.
• In Canada, housing starts fell less than expected in October, coming out at 208,000 units in October, beating expectation for a decline to 200,000 units. 

DATA TO LOOK OUT FOR (all times GMT)

• 1.30pm will see the CAD NHPI, which measures the housing industry’s health. Will it show a rising house price which in turn attracts investors and spur industry activity…??
• 1530pm, Ben Bernanke is making a speech on Small Businesses. Will he give a hawkish tone, is the question traders want to know.
• Crude Oil Inventories due out at 3.30pm in the US. This influences the price of petroleum products which affects inflation but also impacts growth as many industries rely on oil to produce goods.
• 9.30pm  New Zealand will have its RBNZ Financial Stability Report, which will provide insights into the banks’ view of inflation, growth and other economic conditions that will affect interest rates in the future.

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.