manufacturing

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

• Although data recorded a drop in UK retail sales of 0.4% in November, they posted a three month gain of 0.7%, the strongest such gain since August 2010. Across the day, GBP enjoyed a rally to a high of $1.5529 against the dollar belying the ongoing weakness perceived in the British economy.
• While private consumption continues to stall, the BoE will surely see a growing case for expansion of its monetary policy and the minutes of the most recent policy meeting, due out next week, suggest a growing pessimism regarding the economy, expectation for further QE will surely increase.
• Christian Noyer, head of Bank of France, caused a stir by claiming that the UK should have its credit rating cut from the prestigious AAA before France given the relative deficits, debt, inflation and growth.
• GBP/EUR fell from highs of 1.1939 to 1.1868 and back before consolidating between 1.1910 and 1.1920 where it seemed to settle throughout US and Asian trading. 

ELSEWHERE

• Despite the ECB’s monthly report insisting the euro is still under considerable pressure, Spain’s treasury sold €6bn medium and long term bonds, surpassing a target of €3.5bn while 5yr bonds were at an average yield of 4.02%, down sharply from 5.27% last month and 10 year bonds boasted a yield of 5.54% compared to 6.97% last month. Importantly, some consider the stark improvement an indication of ECB involvement in the secondary bond market and therefore somewhat artificial.
• SNB announced their decision to maintain a EUR/CHF floor at 1.2000 with ‘utmost determination’. The intention to maintain the peg which was established on September 6 saw the franc rise 1.2% against the euro to CHF 1.2229 – a six week high.
• This was compounded by the SNB also deciding to keep its key refinancing rate close to zero while Swiss industrial production data recorded a greater than expected decline in the third quarter.
• Manufacturing activity across the Eurozone posted a surprise increase for December although the figure, 46.9, is the fourth consecutive month where the published figure has come in at less than 50, which shows growth or contraction.
• Consumer price inflation remained unchanged at an annualised rate of 3%, in line with consensus.
• Further developments to the European crisis resolutions saw Russia commit EUR10B to the IMF but a dent to plans for longer-term refinancing operations came as bankers seem unlikely to buy more sovereign debt using the 3 year loans available from the ECB from next week
• EFSF have been accused, in some circles, of irresponsibility as the draft prospectus for the latest bailout instruments cites “Risks arising from a Reference Sovereign ceasing to use the euro as its lawful currency...or the cessation of the euro as a lawful currency” as part of four pages of potential risks.
• A short term correction in the major currencies saw the greenback cede gains, which reached as low as $1.2955 against the euro, as part of a rally which will hinge on Friday’s economic docket.
• Data could bolster the dollar with the headline reading for US inflation anticipated match the previous such release. Thursday’s Producer Price Inflation datum in the US matched expectation at a 0.3% rise. Such stubborn price growth and a steady increase in economic activity might hinder expectation for the FOMC to undertake another large scale asset purchase program.
• Thursday’s other data releases saw initial jobless claims fall to a three year low of 366k, according to the Department of Labor, despite predictions of a climb to 390k. The New York and Philly Fed indices of manufacturing conditions climbed to 9.5, a seven month high, and 10.3, double the expected figure, respectively. 

DATA TO LOOK OUT FOR (all times GMT)

• In a relatively quiet day for data, new ECB President Mario Draghi takes part in a panel discussion at the Banca d’Italia, in Rome.
• Eurozone Trade Balance data is released at 10.00.
• US Consumer Price Index is released at 1.30pm and expected to show inflation has remained at 3.5% annually.
• US Fed members Evans and Fisher are due to speak in Fiesole and Austin respectively this evening.

Have a great weekend.

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.