Nicolas Sarkozy

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).

There was a quiet day on the data front yesterday with analysts stating a lack of UK data meant the

markets were mainly driven by movements in risk appetite.

Sterling fell against a broadly stronger euro after French and German leaders promised to put a firm

plan in place to recapitalise Europe’s banks. German Chancellor Angela Merkel and French President

Nicolas Sarkozy offered no details of their plans but they pledged to do what was necessary to

support the banks, settle the Greek debt crisis and help growth within the euro zone, which resulted

in an increase to risk sentiment within the markets.

The pound fell from the early morning high of €1.1607 against the euro to end the session trading

near the low of €1.1453, a fall of over 1.4%.

Sterling performed better against a struggling dollar as it moved from the low of $1.5544 to end the

session trading near the high of $1.5683. This was mainly due to an advance in global stocks which

reduced demand for the greenback as a safe haven.

Sterling has recovered from the lows seen last Thursday after the Bank of England increased their

asset buying programme by £75 billion pounds a move which initially was seen as sterling negative

but now has been seen as a positive to stimulate the UK’s economy.

"Normally more QE would be negative for a currency, but given most of the major central banks are

contemplating more easing themselves, it's not weighing on the pound as much this time around,"

said Derks.

"The market is coming back to the view that a country taking affirmative steps to resolve its

problems is supportive for a currency," said the head of dealing for corporate and

institutional treasury at Investec.

IN THE UK

• Sterling fell sharply against a broadly stronger euro falling over 1.4% to end the session at a low of €1.1452.
• The pound gains against the dollar as investors move away from safe haven currencies and return to riskier assets reaching a session high of $1.5688.
• Analysts state that a lack of UK data meant the pounds moves were largely driven by swings in risk appetite.
• The negative sentiment towards the BoE’s shock increase to QE last Thursday is wearing off and is now seen as a positive to the pound.
• Bank of England policy member Martin Weale states on Sunday that there is still room for more QE, as Britain’s economy struggles in the face of fiscal austerity and the deepening on the euro zones debt crisis.

ELSEWHERE

• The euro performs well as Sarkosy and Merkel’s plans are digested, between them Germany and France promise to put a plan in place to recapitalise Europe’s banks, settle the Greek debt crisis and help growth in Europe.
• The details of this plan will not be released until the end of October.
• The euro rose by the largest daily gains in more than a year against the dollar moving from the low of 1.3392 to trade at the high of 1.3698 a movement of over 2.4%.
• France breathes a sigh of relief as Moody’s and S&P confirmed their AAA rating with stable outlook.
• Slovakia is the last member state of the EU left to vote on of the EFSF, their government meet today, most expects expect them to follow suit and vote for an approval of the new terms.
• UK media this morning report that Spain is unlikely to meet its deficit target, the Spanish economy is far too big to simply bailout and if this prediction is correct it will provide another much larger headache for European Finance Officials.
• Greek Finance Minister says Greek haircut more likely to be around 60% rather than the previously agreed level of 21% in July

DATA TO LOOK OUT FOR (all times UK BST)

• This morning UK Manufacturing Production figures are released expectations are to see an increase of 0.1% MoM the same rise seen in July.
• UK Industrial Production is also expected to increase to 0.4% MoM following Julys 0.2% fall, which could support the pound.
• In the US they release the budget balance data this evening at 7pm which is expected the see the US fed budget deficit move to $1.294trn for the 2011 fiscal year.

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.

We continue our daily look at factors affecting currencies allowing some insight into market conditions affecting exchange rates. Cash and income timing for UK Pensions and QROPS should be considered to maximise the Pension, QROPS and investment income and benefits taken.  

Investment market volatility and currency exchange remains a challenge. Things are still very volatile and we are in unique global influencing territory.  In conjunction with investment returns, currency exchange continues to concern many expats with UK Pensions, QROPS and now QNUPS.

We saw stronger than expected UK retail sales survey on Thursday, which had little impact on sterling as Investors cautiously await the Federal Reserve Chairman, Ben Bernanke’s speech and gross domestic product data later today.

The UK CBI survey showed UK retail sales growth at a three-year high, rising to +35 in August from +33 in July, well above forecasts of +20.

This surprisingly strong data suggests July’s surge in the official retail sales data was not a one-off and the recovery of the economy is seen to continue in the third quarter.

A surge in manufacturing and business services propelled growth to 1.1%, its fastest pace in four years.

A second reading is due today and will give a breakdown by expenditure. Societe Generale except a rise of 0.5% on the quarter after falling 0.1% quarter 1.

Sterling needs to get above the highs of this week at $1.5620 to sustain any rally, however, the pound remains vulnerable to any rise in risk aversion if investors feel that a US slowdown will mirror through to the global economy as a whole, leaving them inclined to seek the safety of the likes of the dollar and the Swiss franc. 

French president Nicolas Sarkozy, today called upon the 20  largest economies to work together in order to get the global monetary order in line.

“We must define a new framework for discussing currency movements”, Mr Sarkozy, adding that China would need to be included when talking about exchange rates, as they have accumulated huge FX reserves.

He also mentioned the need to reduce the dollars dominance as the reserve currency of choice, calling for a greater role for alternative currencies. 

Thursday also saw Gold steady on price, having hit its highest level in two months earlier in the day, after US employment data beat expectations, boosting the dollar and other risk-linked assets such as equities. 

The US Labour Department have confirmed that the number of people claiming jobless benefits for the first time fell by more than expected, taking the edge off some of the concern about the ability of the economy to generate jobs. 

Although this data provided a slight relief to the economy bulls, analysts claim that the overall macroeconomic backdrop remained uncertain enough to wet investor appetite for gold. 

Gold struck a lifetime high of $1,264.90 in June, partly due to the US economy slowdown and a cooling in several major engines of growth, such as China.

“Everybody was optimistic on the economic front back in midsummer, and hence gold was backing off as people were putting risk back on the books and unwinding safe-haven positions” said Scotia Mocatta. “That optimism has disappeared nearly as fast as it arrived. With a string of bad numbers out of the States and the Dow struggling to hold 10,000, the currency markets have become increasingly unnerved by it all” they said.

The dollar, which up until recently has acted as a refuge against volatility in other currencies, has come under pressure as cracks in the recovery of the economy have materialised.

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for QROPS Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pensions, investments, currency exchange and guidance on taxation in most popular ‘sunnier’ climates.   This with the re-assurance and security of UK authorised and regulated advice – essential tools for your security.