Portugal

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.

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

• Royal Bank of Scotland, Britain’s biggest government controlled bank posted bigger then estimated declines in Q3 profit as Europe’s sovereign debt crisis erodes revenue from its securities unit.
• Bank of England may pause bond buying program after reactivating it last month as officials continue to monitor the Eurozone debt crisis before making their next move
• Sterling reached a session high of €1.1661 against the euro from the early morning low of €1.1545.
• Against the dollar the pound traded between the high of $1.6044 and the low of $1.5946.
• This morning in the UK, surprisingly good house prices data was published showing a rise in October of 1.2% from a fall of -0.5% in September. The pound remains slightly up on most currencies from Friday’s close.

ELSEWHERE

• The euro fell across the board on Friday after the G20 leaders failed to agree to a funding plan to support European government’s recent efforts to manage the regions debt crisis. Markets have been dominated recently by the G20 and news developing from Europe and this has resulted in a lack of risk appetite within investors.
• German Chancellor Angela Merkel commented on Friday that leaders failed to agree on IMF resources to help the regions efforts to control the debt crisis. They have agreed a plan to put in place to bolster the economic growth.
• In a G20 closing press conference French President Nicolas Sarkozy said “we will fight to defend Europe and the euro”. He said the G20 had agreed to boost the resources of the IMP and would agree on the specific steps by February. France failed to persuade the rest of the G20 to commit hard numbers to providing a bigger financial safety net for the Eurozone.
• As Greece’s status in the Eurozone looked questionable last week, Ireland and Portugal say they will do whatever it takes to remain part of the single currency
• The Canadian dollar declines after a report showed the unemployment rate in Canada rose in October to 7.3% from 7.1% as the nation eliminated positions for those searching for jobs.
• The Swiss franc weakened after the nation’s central bank reported foreign currency holdings fell to 242.7 billion francs in October from 282.2 billion francs at the end of September.
• The US dollar rose against 14 of its 16 most traded currency partners after the US unemployment rate fell to 9.0% which is a 6 month low from the previous months release of 9.1% whilst Nonfarm payrolls expanded less then forecasts coming in at 80k against expectations of 95k.
• Last night Greek Prime Minister George Papandreou agrees to step down to allow the creation of a national unity government intended to secure international funding and avert a collapse of the country’s economy.
• Asian shares struggle earl Monday as investors are nervous despite the agreement of a formation of a new Greek unity government.
• The Italian prime minister is coming under increasing pressure to step aside after contagion pushed Italy’s borrowing costs to a record high. 

DATA TO LOOK OUT FOR (all times GMT)

• Eurozone finance ministers face a tough assignment at their meeting today. Political developments in Greece and Italy overshadowed the G20 meeting, constraining any real progress on the October 26 EZ rescue plan.
• Investors will be looking at Italian bond auctions today to see how much Italian debt is rising by. 6% is seen as the key figure to show whether or not debt is considered too high, currently Italian bonds are trading at 6.6% and rising and because of political instability, Italy is under pressure to restore its credibility on financial markets.
• Eurozone Retails sales are released at 10am, expectations we are to see a fall of -0.5% which although still showing fall would be an improvement on last month’s 01.0%
• Germany releases industrial production data at 11am. 

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).

With the state of Eurozone periphery finances and US finances coming under such intense

scrutiny, the UK continues to look like a safe harbour for international capital.

All eyes yesterday, were on the Bank of England monetary policy meeting. There was no

surprise, however, as rates remained on hold and the size of the asset purchase programme

was maintained at £200bn. This interest rate is likely to be remained unchanged at 0.5% for the rest of the year.

Eyes and ears will now be awaiting the release of the minutes of this meeting on the 17th

August. Adam Posen has been the only member in the committee to seek additional bond

purchases over the last few meetings and with all the speculation recently it will be

interesting to see if there were any additional votes.

Over in Europe, the European Central Bank also left its benchmark interest rate unchanged

amid heightened tensions in the euro area that have causes many analysts to question the

validity of policy moves made by the bank earlier this year. The ECB has raised its main rate

in two steps since April, from 1% to 1.5%, aiming to head off rising inflation,

which is well above their official target of about 2% but many economists argue that,

excluding commodities such as oil, price pressures remain benign. Meanwhile, growth in

countries like Spain, Ireland and Italy remains very weak.

Analysts expect the ECB to raise rates for the 17-nation euro area again at the end of this

year or early next year, after Mr Trichet retires at the end of October and hands the

presidency to Mario Draghi, governor of the bank of Italy.

European leaders decided last month to authorize the European Financial Stability Facility to

buy bonds in open markets, relieving the ECB of that responsibility, although it’ll take

months before the EFSF is able to start making purchases.

At a news conference, Jean Claude Trichet said the bank’s bond-buying programme, which

had been inactive since March, was still operational.

“I never said myself that it was dormant,” Trichet said, adding that weekly ECB bond buying

data would show what actions had been taken by the central bank, “It is an ongoing

programme and we are totally transparent.”

The central bank came under pressure to act following a sharp escalation of the debt crisis in

recent weeks. Italy has seen its bond yields soar, which has alarmed policy makers since

bank exposure to its debt dwarfs that of the countries already bailed out; Greece, Ireland

and Portugal.

Across the seas in the USA, official data from the US Department of Labour, showed the

number of people who filed for unemployment assistance fell unexpectedly by 1K to a

seasonally adjusted 400,000, confounding expectations for an increase to 406,000.

Following the release of the data, the US dollar was up against the euro, slumping to a low of

1.4110. However, US stock index futures were unchanged following the data.

IN THE UK

• All eyes were on UK interest rate decision yesterday lunchtime, which remained unchanged at 0.5%. The asset purchase programme also remained unchanged at £200 billion.
• The pound hit a high of $1.6438 against the dollar and €1.1552 against the euro. This is the first time for over two months GBP/EUR has breached the €1.15 level.
• UK is said to miss its forecast 1.7 percent growth, as per the head of the country’s fiscal watchdog.
• Dire conditions in the UK stock markets force the FTSE to fall 3.5% as equity values tumble and open another 3% lower this morning.
• This morning the various UK PPI figures all came in largely as expected, this has made little if any difference to the pound

ELSEWHERE

• The European Central Bank keeps interest rates on hold at 1.5% but Jean Claude Trichet signals possible hikes by the end of the year, this bullish attitude to interest rates is helping the ECB lose fans all over the world as it seems cavalier to even suggest raising rates when countries such as Italy and Spain are on the brink of falling to meet their debt expectations.
• EURUSD fell further after the beginning of the US session and bottomed at $1.4110. The euro weakened amid risk aversion and following Jean-Claude Trichet’s press conference and fell across the board.
• US initial jobless claims fall unexpectedly in a report by the US Labour Department. This was adjusted to 400,000, less than expectations of a rise to 406,000, attention turns to the US Non Farm Payrolls released this afternoon.
• Stock Markets posts negative figures all over the world as fears rise of a global recession, not one of the major markets reported a rise.
• The RBA slashes its growth forecast for Australia from 3.25% to 2% and this helped to weaken the AUD, GBP has gained nearly 2 cents from yesterday meaning nearly 8 cents this week in gains.
• Yesterday’s currency intervention from the SNB and BOJ to reduce the value of the respective currencies seems to have lost momentum, GBP/CHF and GBP/JPY are both showing declines this morning and both currencies made gains against the USD

DATA TO LOOK OUT FOR

• Both YoY and MoM German Industrial Production out at 11.00am. Expected to come out at 8.1% and 0.0% respectively.
• The Canadian Unemployment rate is due out at 12.00pm, which is forecasted to read 7.4%, so very interesting to see how this actually reads.
• Main data today is at 1.30pm when US Unemployment rate and Non-farm Payrolls for July are released. NFP posted a terrible figure last month and is expected to rise significantly today. The US dollar will remain volatile in all pairs if the figure fails to meet expectations of approximately 91k
• Finally we have USD Consumer Credit out at 8.00pm this evening.

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.