banking

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 <?xml:namespace prefix = st1 />UK

• Sterling made slight gains against the US dollar as a bank holiday in the US eased trade volumes, however GBPUSD remained close to 18 month lows as ongoing concerns about the Eurozone, and in particular the ratings downgrades leave risk appetite at a low.
• The pound remained over the €1.20 mark against the euro, driven by concerns following the European downgrades late last week as well as the weight of Greece and their next bailout.
• Sterling has been driven by safe haven flows and this was increased by the ratings downgrades as investors swapped their Euro government debt for UK Gilts instead driving the price down very close to a new record low.
• The UK treasury has this morning announced plans to make London the leading inter nation trading centre for trading the Chinese Yuan, saying that as a gateway to Europe London is the perfect base for Asian banking and investment.
• House prices in England and Wales fell by 0.8% on the month (+0.4% on the year) in January, according to property website Rightmove, to £224,060. In December prices fell 2.7% on the month, to £225,766 (+1.5% on the year). 

ELSEWHERE

• Following yesterday's news that the Euro was close to an 11 year low against the Japanese Yen the pair swiftly broke that new record following investors seeking the safe haven Yen falling to 97.04. The Yen gained against 13 of its 16 key trading partners giving an indication of the knock on effect of the Eurozone downgrade.
• In news this morning the European Financial stability Fund (ESFS) has lost its triple A credit rating following the downgrade of France and Austria last week. The rating was cut to AA+ from AAA, S&P had warned that it may face a downgrade if it's guarantors lost their triple A status.
• Concerns over the latest Greek bailout and whether it will go through may ease on Wednesday, following the stalling of talks due to a disagreement about how much money investors will lose by swapping their bonds. Talks between Greece's Prime Minister Lucas Papademos, Finance Minister Evangelos Venizelos, and Charles Dallara, the managing director of the Institute of International Finance, which represents private creditors, will resume Jan 18th.
• Canada's dollar rose against all but two of its 16 major peers on speculation its exports will benefit from accelerating U.S. economic growth. Reports on manufacturing from the Fed may show further growth later this week.
• In news this morning China's GDP fell to a 2 and a half year low but beat expectations posted allaying fears that China is set for a hard landing, this led to a selloff of safe haven currencies such as the US dollar and JPY and brought a touch of risk appetite back to the market.
• Off the back of the Chinese data this morning the Australian dollar posted some consistent gains against a host of currencies as investors foresaw a demand for commodities from China, Australia's biggest export market. 

DATA TO LOOK OUT FOR (all times GMT)

• A busy morning for data starts with UK Consumer Price Index figures and Retail Price Index figures at 9.30am. Inflation has been stubbornly high causing problems for the economy but today’s CPI reading is expected to fall slightly to 4.2% whilst RPI is forecast to fall to 4.8%
• Bank of England Governor Mervyn King speaks today at 10.00am.
• Eurozone Inflation figures are released at 10.00am, like the UK, annual inflation is expected to have fallen slightly to 2.8%.
• German ZEW survey is released at 10.00am and will give an indication of sentiment surround the German economy.
• Bank of Canada release their interest decision at 2.0pm, they are expected to leave rates on hold at 1%
• Westpac Consumer Confidence figures are released for December at 11.30pm

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 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.