China

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).

N THE UK

·         Policy makers in the UK have been accused of not doing enough to promote competition in banking and nurture alternative sources of finance for small businesses.  As rates remain low and inflation is likely to continue to slow BoE Policy maker Adam Posen has pointed the finger saying that banks and policy makers are still risk averse and reluctant.

·         UK Purchasing Managers Index suggested a slight improvement in manufacturing, posting a figure of 52.1 versus expectations of 50.1 which resulted in GBP capitalising on a move higher against the dollar to $1.5857 and recovering back above €1.20 against the euro.

·         Having broken through a level of resistance at $1.5770 the pound moved to its highest level against the greenback since November of 2011.  Focus remains to the upside despite short term risk of a slight correction lower.

·         GBP/JPY is considered to have found a floor following a drop off in sterling during the month of January; the battle between these two safe havens seems to have changed direction and traders feel the pounds attack on key resistance level of 121 could pave the way for further gains. 

ELSEWHERE

·         Despite coming under increased pressure to join the bond swap being negotiated with Greece, the ECB remains coy over how it will help the country cut its debt burden. The Greek Government has until 20th March to reach a deal and release the second EU bailout.

·         Polish Finance Minister Jan Vincent Rostowski argues that factors such as the absorption of EU structural funds and recent measures undertaken by the ECB have stabilised conditions in the European environment; a feint voice against stiff criticism of German and French leaders.

·         All major currencies are trading higher against USD following better than expected PMI figures from China and Europe and the lower than expected figures for US ADP non-farm employment and PMI.

·         Switzerland posted retail sales a percent below expectations of 1.6%, but December saw a 21% rise in exports. Despite the offsetting effect of this information CHF lost value against GBP, EUR , USD and AUD and this morning’s worse than expected trade balance of 2.07B leaves the Franc open to further movement lower.

·         Australia posted a favourable trade balance (surplus) at $1.71B, exceeding expectations of 1.22B and bringing GBP/AUD and EUR/AUD to 1.4754 and 1.2280 respectively on the back of a boom in mining exports.

·         Japan posted a 15% figure for its year on year monetary base.  The Japanese bought the highest number of foreign bonds since September in the week ending 27th January, suggesting the BoJ are keen to hedge  against the risk of global inflation.

DATA TO LOOK OUT FOR (all times GMT)

·         Construction data for the UK is released later this morning, and the markets will be looking to asses comments expected from MPC member Posen at approximately 2.00pm.

·         US unemployment figures, forecasted for 373k, will be complimented by testimony from Fed Chairman Bernanke.

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

• Britain was in the spot light on Friday as David Cameron didn’t agree to new fiscal terms at the EU summer saying he is safeguarding the UK’s banks and vowed to never join the euro. This has caused widespread disagreement within the coalition government. Nick Clegg believes the UK will be left behind and have less power with the Eurozone.
• Sterling showed little reaction to data showing record exports helped narrow Britain's trade deficit at its fastest pace since in October records began. October’s figure came in at £-7.557bn, significantly better than the previous months £-10.175BN, and much better than the consensus view £-9.500 Analysts said they remained concerned that Eurozone turmoil and weak demand at home would threaten an economic recovery in the UK.
• A choppy trading day on Friday saw GBPUSD with little change and closed of near $1.564. This morning we have seen it carry on down below the 23.6% Fibonacci retracement level of $1.5597 and currently trading at $1.5565 (December low) as investors look to at dollar as a safe haven.
• A report by the FSA says RBS gambled with its purchase of Dutch bank ABN Amro and was dragged to the brink of collapse three years ago by poor management decisions and flawed regulation and supervision.

ELSEWHERE

• Friday saw the euro swing euro back and forth after all EU nations except the UK and Hungary agreed to new fiscal ties at an emergency summit, the summit went a long way towards forging the closer economic ties needed to prevent future debt crises but markets are likely to judge it as too little and too late to solve the current one.
• EU leaders agreed stricter budget rules for the Eurozone but failed to secure changes to the EU treaty among all 27 member states. Countries also failed to reach an agreement on giving a banking license to the Eurozone's permanent bailout fund, limiting its firepower. They announced the possibility of increasing the size of the ESM above €500bn, this is due to be discussed further next March.
• The highlight for Germany was the announcement of no PSI in the ESM as a precondition, but adherence to the “well established IMF principles and practices”. Finally, discussion about an IMF provision of an additional €200b of resources is to be confirmed in the coming days.
• EURUSD initially strengthened on the news rising to $1.3425, however concerns that the agreement doesn't represent a solution to the debt crisis drove the euro back down to $1.335. Monday morning has seen the USD gains continue, current trading is $1.3307.
• Moody's downgraded its long term ratings on French banks with BNP Paribas, Credit Agricole and Societe General citing deteriorating macro fundamentals and funding issues.
• Canada recorded a surprise Trade balance deficit (-$885m vs. +vs. +$1b) in October, following a big month surprise surplus. The drop came mostly on the back of a -3% fall in exports (biggest decline in eight-months) and a +1.9% advance in imports.
• China revealed details to create Eurozone and US investment funds for a total of about $300bn. The aim is to help pump money into the Eurozone to boost returns on its foreign exchange reserves with aggressive high return investments.
• Inflation in China eased to its lowest in 14 months in November, providing ample room for the central bank to ease policies to support economic growth amid turbulence in Europe, China's biggest trading partner. Inflation eased to 4.2 percent in November from 5.5 percent in October, the National Bureau of Statistics said Friday. The rate cooled for a fourth consecutive month, after peaking at 6.5 percent in July.
• India’s industrial output shrank for the first time in 28 months, pushing stocks and the rupee lower on concern faltering growth will force the central bank to suspend its fight against the fastest inflation in BRIC nations.
• Foreign-exchange strategists are slashing their forecasts for the euro at the fastest pace this year as European Central Bank President Mario Draghi’s interest- rate cuts remove one of the currency’s pillars of support.

DATA TO LOOK OUT FOR (all times GMT)

• Markets will be waiting for further fallout from last week’s EU Summit in an otherwise fairly quiet day for data announcements.
• At 7.00pm the US monthly Budget Statement is released, the figure is expected to fall sharply to -$150bn as expenditure across Federal Entities, Disbursing Officers and Federal Reserve Banks out ways payments in.
• Japan’s Tertiary Industry Index for October is released overnight and is forecasted to show an marginal improvement.

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).

Sterling rebounded against the dollar on Friday, after much weaker than forecast US jobs data

drove investors who had added bullish bets on the greenback in expectation of a strong number

to unwind those positions.

Sterling rose to a session high of $1.6078 reversing earlier losses, with investors now targeting

the July 6 high of $1.6090. The short covering also helped the pound advance against the euro,

with the common currency last down 1% at €1.1243 .

U.S. data showed employment growth ground to a halt in June, with employers hiring the fewest

number of workers in nine months, dashing expectations the economy would regain momentum

in the second half of the year.

Analysts expect investors to sell into sterling's latest rally, although near-term support remained

robust around Friday's low of $1.5930 with traders citing bids from Asian central banks and

corporate buyers.

Earlier, the pound barely reacted to data showing Britain's construction industry struggling to

grow in May and an unexpectedly strong rise in UK factory gate inflation, which climbed to its

highest level since October 2008.

The weak data along with the high prices did little to shake the market view that the Bank of

England is committed to loose monetary policy and unlikely to raise interest rates before next

summer.

In the U.S., short-term interest rate futures traders are betting the Federal Reserve will stay on

hold well into 2012 after the June jobs report. Traders, who had thought the Fed would likely

begin raising rates by the July 2012 meeting, slashed those bets and they now see just a 36% chance of a such a hike.

EURO WHIPPY BEFORE STRESS TESTS

While the dollar sold off broadly after the jobs numbers, the euro failed to get much of a lift. The

euro was down 0.3% against the dollar at $1.4320 , with investors wary about the single

currency amid lingering concerns about debt contagion.

Traders said against the pound, the euro has support around 88.595 pence -- the low hit on June

27 -- and then around 88.50 pence, the 50% retracement of the euro's rise from a low of

86.11 pence on May 26 to its 15-month high of 90.84 on July 1.

Earlier, the euro had come under pressure on a European Union draft report outlining measures

to deal with weak banks and the suspension of trade in shares of Unicredit.

The single currency then bounced back, with traders citing a Reuters report saying all five Italian

banks covered in EU stress tests had passed.

Overall, Schmidt at Lloyds said investors will be wary of adding euros to their portfolios ahead of

the results of EU-wide bank stress tests next week.

The euro had risen to a 15-month high against the pound earlier this month as a result of the

single currency's favourable interest rate differentials.

On Thursday, the European Central Bank hiked base rates to 1.5% and markets have

priced in another rise this year, although some analysts expect it to take a pause

IN THE UK

• The pound had little response on Friday to a rise in Producer Output prices on Friday as investors felt the information was not enough to warrant a shift in interest rate speculation.
• However, after lunch GBP/USD spiked almost a cent to 1.6073 as disappointing employment data in the US causes a USD selloff
• The pound rises this morning to a high of 1.1299 against a slightly weaker euro as debt worries remain in the news.

ELSEWHERE

• Friday’s much anticipated US employment figure are significantly worse than expected, some experts were hoping for a figure over 100k, the posted figure was 18k the lowest rise since September 2010.
• Unemployment rate in the US follows week Non Farm Payrolls data and rises to 9.2%.
• EURUSD falls to a low of 1.4138 after reports suggest that the debt problems are going to hit Italy. Europe’s 3^rd largest economy would require the EU bailout fund to be doubled to 1.5 trillion euros if intervention was needed.
• Markets are now beginning to think the euro is a dangerous bet, many have felt that it has been overpriced recently and despite all negative press never seems to go down. Whilst EUR/USD and GBP/EUR would appear to support this comment EUR/CHF, EUR/JPY and EUR/NZD all within 20 pips of multi-year lows.
• AUD suffers slightly as Chinese inflation is slightly higher than expected and China says they will be watching monetary policy closely.
• The US debt talks will continue today, no progress has been made and there are just 3 weeks to go before deadline of 2^nd August to reach a resolution.

DATA TO LOOK OUT FOR

• Quiet day of data today includes Norwegian CPI figures
• Canadian House Starts at 1.15pm followed by Bank of Canada Business Outlook Survey for Q2.
• EU Finance ministers meet today to discuss amongst other things Italy and to prepare to accept Greece’s should default on some of its bonds.
• President Obama continues debt talks with members of congress and treasury.
• Overnight tonight in the UK RICS release the Housing Price Balance, the figure is expected to show a slight improvement in housing market condition and move up from -28 to -25.

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.