Spain

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

• The Bank of England as expected left rates unchanged at 0.5% and Quantitative easing at 275bn creating some relief and helping sterling climb to $1.5408 early this morning from the three month low of $1.5279 hit yesterday.
• Most traders still expect the Bank of England to extend quantitative easing at the February meeting, which is acting as black cloud over the pound’s head, any comments suggesting this in the coming weeks will weaken sterling.
• Sterling tumbles against the euro as successful Spanish and Italian debt auctions bring some relief to the euro, sterling has already fallen to a low of €1.1936 this morning
• UK Industrial output falls 0.6% in November, heightening concerns over the strength of the economy.
• George Osborne debates on whether Scotland should use the pound or the euro if there were to become independent. Alex Salmond’s says Scotland would initially use the pound and enter into the euro at a later date. Osborne thinks this plan will fall apart.
• Sterling continues to fall against the AUD, already hitting a low of AU$ 1.4837 this morning 
• UK Producer Price Index reveal slightly worse than expected figures, all components fell however this has not affected the pound so far.

ELSEWHERE

• Spanish and Italian debt Auction go better than expected yesterday, Spain sold double the targeted amount and raised €10bn whilst Italy raised €12bn. In response, the euro strengthen across the board with EURUSD moving back above $1.28, hitting a high of $1.2878 this morning.
• Following the auction, the benchmark Italian and Spanish 10-year bond yields fell respectively to 6.55% and 6.08% in the secondary markets
• In their monetary policy meeting, the ECB as expected kept rates unchanged at 1%, Draghi’s comments helped the euro as he indicated there were signs of stabilisation in the Eurozone and suggested no immediate plans for a further rate cut.
• China’s foreign exchange reserves drop for the first time since 1998, falling to $3.18 trillion on Dec 31 from $3.2 trillion Sept 30 as foreign investments moderate, trade surplus narrow and Europe’s crisis spurred investors to sell emerging market assets.
• The US dollar was hit by the European bond auctions going better than expected as investors fly out of the safe haven and move to riskier assets.
• US unemployment benefits jumped last week rising to a six week high of nearly 400,000 jobs
• US retail sales continued their upward crawl in December, rising 0.1% in the month according to initial estimates 

DATA TO LOOK OUT FOR (all times GMT)

• European trade balance for November is released at 10.00am.
• US trade balance is due out at 1.30pm and is expected to come in at $43.47bn which is lower than the previous figure of $45bn
• At 2.55pm, the Michigan Consumer Sentiment Index is released, the recent good run of US data is expected to have push sentiment up to 71.5 from 69.9.

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

• Asking prices for a property in the UK declined for the second consecutive month in December, the latest survey by Rightmove showed early this morning. The Rightmove House Price Index, a leading indicator of residential property prices in England and Wales, dropped 2.7% (MoM) in December, following a 3.1% fall in the previous month. Annually, asking prices rose 1.5% in December compared to 1.2% increase in the previous month.                                                                                                                                                            

• GBPUSD was around the $1.549 area this morning as dollar continued to receive safe haven status as the European solution looking less and less likely in the medium term.                                                                                               

• Against the euro, sterling has found some relative safety as a 'buy only' pair and on Monday morning continued to hover around the €1.19 level.

ELSEWHERE

• On Friday, Fitch become the latest ratings agency to cut its outlook on France's AAA rating and said it might downgrade the ratings of Italy, Belgium, Ireland, Spain, Slovenia and Cyprus blaming any comprehensive solution to the European debt crisis.

• Fitch also downgraded the long-term credit ratings on six major banks including US banks Goldman Sachs, Bank of America, Morgan Stanley. Fitch cited the issues facing the banking sector and the exposure these banks have to the European debt crisis.

• Fellow rating agency Moody’s downgraded Belgium’s sovereign credit rating by two notches from Aa1 to Aa3.

• Italy's new government won a crucial confidence vote, paving the way for sweeping austerity. However, Italian Prime Minister Mario Monti took a veiled swipe at German Chancellor Angela Merkel for the pound of flesh demanded in return for financial help. Monti said the sovereign debt solution "should be wrapped in a long-term sustainable approach, not just to feed short-term hunger for rigor in some countries," in reference to Germany's insistence on crippling austerity measures for big debtors.

• The Eurozone Trade surplus fell to €1.1bn in October from €3.1bn in the same period of last year, Eurostat said Friday.

• The US Dollar held its ground versus the euro on Friday, bouncing back from modest early losses after Fitch became the latest ratings agency to warn on some key European nations. EURUSD this morning was not far from Wednesday's 11 month low of $1.2944, currently $1.3010.

• US consumer prices held steady in November in news overshadowed by the Eurozone on Friday. The consumer price index for November was unchanged from October levels, which showed a 0.1% decline from September. Most economists had predicted a slight, 0.1% increase in the cost of consumer goods.

• The Reserve Bank of India on Friday opted to maintain its key rate unchanged, thus stalling a rate-tightening spree, in a bid to support the depreciating rupee. The central bank headed by Governor Duvvuri Subbarao maintained the repo, the rate at which it lends to banks, at 8.50% and the reverse repo, the rate at which the central bank borrows from banks, at 7.50%. Economists had anticipated the decision, as inflation has slowed and industrial production dropped for the first time in more than

two years.

• On Sunday night North Korea's state leader Kim Jong-Il passed  away after suffering a heart attack. The most exposed currency pair is USDJPY which rallied from 77.86 to 78.16 upon the news but didn't last long and retracted back below the 78 level. The US dollar was initially bought up on the political uncertainty.

DATA TO LOOK OUT FOR (all times GMT)

• At 3.30pm, ECB President Mario Draghi is speaking before the European's Parliament's Economic and Monetary Committee in Brussels

• GBP Consumer Confidence is out later today which is a leading indicator of consumer spending. The figure is expected to show a fall from 36 to 34 as conditions tighten up.

• Overnight in Australia we have the Monetary Policy Meeting minutes which shows a

detailed record of the Reserve Banks most recent meeting, Australia’s interest rate

was cut from 4.5% to 4.25% in the first back to back reduction since 2009.

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

·         On Friday, PMI Construction comes in at 52.3 for November which is lower than the previous release but higher then market expectations the data was of little interest to the markets.

·         Sterling falls from the early day’s high of €1.1658 against the euro during the afternoon to a session low of €1.1599, before recovering and then spent most of the day trading around the €1.1630 level.

·         The pound rallied in the morning against the US dollar but fell back during the afternoon to trade between $1.5725 and the low of $1.5576 after investors booked profits on move higher in riskier currencies.

·         Concerns grow that the UK economy looks vulnerable to a fall as a result of the Eurozone debt crisis with Mervyn King advising UK banks to build capital to insure against the “exceptionally threatening “ situation developing. .

·         Speculation mounts in some camps the Bank of England may take additional steps this week to stimulate the ailing economy in the form of quantitative easing, which is currently standing at £275 billion. 

·         This morning PMI Services data in the UK was better than expected at 52.1 against expectations of 50.7, the services sector accounts for 75% of UK GDP.

ELSEWHERE

·         The euro rose after a proposal to channel central bank loans through the IMF which may deliver up to €200bn to help control the regions debt crisis. Under the proposal, national central banks would recycle funds through the IMF, potentially to underwrite lending for Italy and Spain, the two most vulnerable countries right now.

·         There have been four rescue packages over the past 19 months which have all failed to control the Eurozone debt crisis which fuels speculation that the single currency might break up unless European leaders forge a united front.

·         German chancellor Angela Merkel called for European treaty amendments to create automatic court enforced sanctions on countries that overstep limits of 3% of GDP on deficits and 60% of GDP on debt.

·         Concerns still mount that Spain will be next to have their credit rating downgraded.

·         The Swiss franc fell for the third day in a row after Switzerland said it may consider additional steps to support the country’s central bank in its ongoing battle against the currencies appreciation. 

·         US unemployment dropped to 8.6% on Friday, its lowest level since March 2009 from 9.0% in October. US Non Farm payrolls climbed by 120k coming in roughly on par with estimates of 119k. Adding to the positive news, October’s NFP figure was revised upwards to 100k.

·         The euro fell sharply against the US dollar on Friday afternoon to hit a session low of $1.3374

·         Thursdays ECB interest rate decision will be important, suggestions are the markets are currently pricing in a 25 basis point rate cut. The euro’s seemingly unfazed strength over the last year has been largely due to higher rates, if a cuts continue into 2012, the euro will rely more heavily on data announcements and sentiment about the health of the Eurozone may have more of an effect.  

DATA TO LOOK OUT FOR (all times GMT)

·         German Chancellor Merkel and President Sarkozy meet today again to discuss in more detail the proposed rescue packages for the Eurozone.

·         European retail sales is released at 10am which is expected to rise to 0.2% from -0.7%.

·         US ISM Non-manufacturing for November is released at 3pm along with Factory Orders for October.

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.