Ireland

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 Bank of England Quarterly Bulletin was held yesterday and confirmed the gloomy outlook for the UK economy. Unemployment has remained higher than before the recession, and credit conditions are still tight.

• The pressure on household finances intensified in December, with new figures showing the squeeze is now heading towards the record levels recorded in August.  Britain's recovery from the recession of 2009 has been slowed by falling consumption "reflecting the challenging environment facing  households".

• Data showed 56% of households reported a fall in deposable income in the last 12 months whilst only 13% saw a rise.

• UK Chancellor, George Osborne, believes the economy will grow 0.9% this year and just 0.7% in 2012. This figure has been revised downwards twice in the last 12 months. He announced new regulations covering UK banking. Very simply, retail and investment banking will be separated within banking institutions to help avoid the problems seen in 2008 when Northern Rock, RBS, Lloyds and HBOS hit the headlines.

• Yesterday’s news was not all bad as Dr Howard Archer, chief UK economist IHS said November's dip in inflation to 4.8% from a three-year high of 5.2% in September should mark a step in a substantial downward trend that will increasingly ease the squeeze on purchasing power.

• Rating agency Fitch cut several big name banks including UK based Barclays.  Concern about the UK's heavy exposure to the banking industry is likely to put pressure on the pound as trading winds down towards the year end.

ELSEWHERE

• The Euro lost further ground after Draghi admitted the law prevents him from extending the euro bond purchase programme further.

• Eurozone sovereign associated risk remains unchanged, the ECB’s new head told the EU parliament that purchases of peripheral debt were temporary and "not infinite”.  He was also downbeat on the region’s growth prospects, saying that 2012 will be a difficult year for the Eurozone's banks and that recovery in economic activity is likely to be slow.

• Following several days of intense speculation of forthcoming rating cuts, Fitch has placed France under a negative rating outlook for a possible downgrade The rating agency explains that the country has the highest structural budget deficit and more debt than its peers. This negative outlook means that there is more than a 50% chance that France will lose its triple-A rating over the next two years.

• Belgium, Spain, Slovenia, Ireland, Cyprus, and Italy were placed under credit watch negative. These countries already had a negative rating outlook so the new warnings have put their ratings at more risk. Fitch said it will reach its conclusion in January and the cut could be of one or two notches.

• Pressure is mounting on Spain after the latest set of disappointing figures were released yesterday. The bad loans rate for the Spanish financial sector rose to 7.416% in October. Overall, €131.908bn in loans were more than three months overdue and October's rate was the highest since November 1994.

• Markets opening was mixed on Monday, as news that North Korean leader Kim Jong Il died of a heart-attack circulated the markets. Although his son is expected to succeed him, the news has South Korea's military and other countries on alert at the wait for the succession to be confirmed. Asian stocks reacted with general losses.  The South Korean Kospi fell more than 5% while Japan's Nikkei fell 1.26%.

• The US Dollar rose off the back of the uncertainty versus the majors and the South Korean Won. This news has unleashed some rumours about the relationship between the two Koreas, ranging from the possibility of new confrontations to a possible unification.

• Germany, the Eurozone’s biggest contributor had promising IFO figures released this morning, all 3 components showed healthy rises. Possibly the most important European data release of the week shows that Germany is still performing well.

DATA TO LOOK OUT FOR (all times GMT)

• CBI Distributive Trade Survey is released at 11.00am in the UK, an indicator of trends in the retail and wholesale sector. The markets are expected a slight improvement from last month’s -19% to -17%

• Canadian inflation figures are released at 12.00pm, both annual CPI and Core CPI are expected to show rises to 2.2% and 2.9% respectively.

• US Building Permits are released at 1.30pm and expected to show the number of permits dropped slightly in Nov, however actual Housing Starts is expected to have risen in Nov.

• New Zealand Current Account Information is expected to show net flow of cash has

dropped significantly into the red, -$3.755bn from -$0.92bn last month.

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

• Sterling held its ground across the board despite concerns about growth, following stronger than expected Retail Sales data late last week.
• Rumours about further QE may take more of a back seat following the surprise in Retail Sales but given the outlook for sterling it would take continued upside surprise in Q4 data to keep those rumours out of the market.
• Sterling is still likely to be driven by concerns surrounding the Eurozone rather than data closer to home, with the focus this week on Mario Draghi and Eurozone debt auctions.
• UK consumer confidence survey released late last week showed it had fallen to a record low in October.
• Analysts over the weekend were discussing the pounds recent performance giving it some form of ‘safe haven’ status, probably due in some part to a lack of a suitable alternative as both Japanese and Swiss central banks have intervened to weaken their currency. The US economy is still struggling and investors have started to think the UK’s relatively safe triple A credit rating and low rates on bond support the UK as a safe bet.   
• This morning sees a ‘risk off’ start to the day with sterling falling to a 1 month low vs the US dollar of $1.5687.

ELSEWHERE

• Talk that the ECB may consider unlimited euro debt purchases have been heard late last week, however the new president Mario Draghi didn’t sound quite soon keen and reports over the weekend even suggested that he may do the opposite and cut back on the ECB’s debt purchases.
• Debt auctions this week may be affected by Mario Draghi’s decision on the best way forward as mentioned above, with debt auctions for France, Spain and Italy all scheduled for this week.
• AUD and CAD both suffer at the end of last week as commodity based currencies struggle following stronger numbers from the US. 
• The US have two days left to propose a 10 year deficit reduction of at least $1.2 trillion. The markets are expecting congress to fail to meet Wednesday’s deadline partly explaining this morning’s risk aversion. In the summer we saw how difficult it was to for US lawmakers to agree to raise the debt ceiling limit and if they struggle again and sustainable spending cuts are not set forth, the United States could be facing another debt downgrade within the next week.

• Although Spanish and Italian bonds fell back on Friday they were far from what would be considered reasonable and are still classed as critical, Spanish bonds were at 6.78% last week, too close for comfort to the critical 7% level.

• A debt downgrade will undoubtedly affect the US dollar’s safe haven status and cause it to weaken in the long term, however for now, the markets are likely to remain averse to buying riskier assets which will actually help the US dollar strengthen in the short term.
• Over the weekend the Spanish Socialist party were overturned, the new Prime Minister Mariano Rajoy has a difficult job as immediately has to implement tough austerity measures to reduce the deficit of the nation in much the same way as Greece, Ireland, Portugal, Italy and the UK.

DATA TO LOOK OUT FOR (all times GMT)

• A fairly quiet day for important data in the Western trading sessions comprises Wholesale Sales in Canada at 1.30pm
• Existing Home Sales data is released in US at 3.00pm, the rate of decline in home sales is expected to improve from -3.0% to -2.2%, if realised this would show a healthy improvement and outlook for the US economy.
• American, British and German growth figures are due between Tuesday and Thursday; all are key for determining how much more easing each of their respective central banks will introduce to markets.
• The most important event on the week comes on Wednesday, when the US Joint Select Committee on Deficit Reduction faces its deadline.

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.