economist

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 are expected to keep interest rates on hold this afternoon at the monthly interest rate decision meeting and will maintain its £275bn bond purchase target.
• UK services and manufacturing gauges unexpectedly rose last month, showing the economy gained a little strength (but only modestly); however the BoE has indicated that the economy may in fact be stagnating as recovery is impaired by the European debt crisis.  Sterling opens trading today against the euro at €1.2036, nearly a cent down on the start of the week.
• Debt worries in the Eurozone weighed on the London markets yesterday as disappointing economic data dampened the mood and pulled the FTSE lower.
• Today sees an illustration of how Britain can be affected by the Eurozone crisis as RBS announces 3,500 jobs losses.  The European crisis has forced securities firms to scale back or close divisions that trade European equities – and the UK and The City is acutely affected by this shift. 

ELSEWHERE

• Although showing growth of approximately 3% over the year, the German economy worried the markets by posting a contraction of 0.25% in an unofficial release.  Schulz, a senior economist at Berenburg, sees a ‘25% chance of the euro crisis remaining out of control longer…spiralling out of control with a series of sovereign and bank defaults’.  In such a scenario, Germany would enter a major recession.
• The euro suffered from heightened risk aversion as some investors may expect the euro to drop should the union break up.
• Rumours have surfaced that the French government had be notified by S&P that a downgrade of its AAA status is looming.
• Despite morning gains against both GBP and USD, the euro ended the day at $1.2698 against the greenback, with losses compounded on the back of EU growth forecasts.
• USD saw a definite flight to safety in light of these concerns over a European recession.  USD moved to a 16 month high against euro, whilst cable fell to a three month low of $1.5308.
• Officials from the Fed reserve are undecided on the need for further easing. Sung Won Sohn, former chief economist at Wells Fargo suggests that “ despite recent signs of improvement, Fed officials are very vigilant about the economic recovery continuing and improving,”
• Asian stocks fell for the first time in four days, while gold rose as data showed slowing demand for Japan’s exports. 
• Oil rallied 0.5% to $101.38 a barrel, while natural gas slumped to a 28-month low – easing the pinch on domestic costs a touch.
• The New Zealand dollar weakened against 15 major currencies but still remains at an inflated value of 1.9228 against the pound  - this slide is largely due to a drop in the value of commodity prices according to ANZ bank. 

DATA TO LOOK OUT FOR (all times GMT)

• Today both the ECB and MPC deliver their monthly rate decisions.
• The United States release both core and non-core retail sales data at 13:30, with both expected to have increase by 0.1%.
• US Unemployment Claims are also expected to climb.

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

• GBP/USD saw plenty of volatility yesterday, quickly achieving the day’s high of $1.5594 at 11am from the low of the session seen at $1.5459 at 8am.
• GBP/EUR behaved with much less volatility moving within a range of less than half a cent to close the London session at €1.1650.
• A report by the Organisation for Economic Co-operation and Development (OECD) yesterday suggested a possible £125bn increase to the QE program bringing the total to £400bn. The report also warned that by 2013, unemployment could reach 9% and inflation was expected to fall below the 2% target.
• The British Chamber of Commerce (BCC) had previously projected growth in GDP of 2.1% for next year has now revised it to 0.8%. They expect interest rates to remain at 0.5% until Q4 2012. .
• Sterling performed well against JPY yesterday with a session high of 121.671 after opening at the day’s low of 120.071. 
• Earlier today the UK Nationwide Housing year on year change report revealed a 0.3% increase and a 0.4% increase month on month.

ELSEWHERE

• After making gains yesterday morning, EUR/USD fell during the latter part of the European session and continued to fall to $1.3295 during US trading.
• The OECD report has claimed the contagion risk has now made the Eurozone crisis the biggest single threat to the world economy. Coupled with the lack of a spending-reduction plan in the US the world could be at risk of a “devastating downturn”.
• The BCC’s Chief Economist, Padoan said in an interview that Germany is now at risk from contagion. Adding weight to the on-going proposal that the ECB take more of a direct role in rescuing the Eurozone.
• World economic growth is expected to fall to 4.8% in 2012 from 6.7% this year. Even China is forecast a slowdown to 8.5% in 2012 from 9.3% in 2011.
• Italy continued its auction of sovereign debt yesterday issuing €567m of 12 year bonds with yields touching 7.2%, a significant increase on the 4.5% reached at the last comparable issue. 10 year bonds however saw a subtle decrease from 7.26% to 7.14% but remained above the 7% “danger” line considered to be unsustainable in the long term.
• Italy is now described by the OECD as “entering recession” because government debt at 118% of GDP and an average economic growth rate of just 0.75% over the last 15 years,
• In the US, annualised New Home Sale data was down slightly on consensus, however the monthly figures for October were up 1.3%.
• Japan had a mixed bag of data which showed; unemployment rose 0.4% to 4.5% in October, Overall household spending was up 1% (Year on year) for October, large retailer sales were up 1.2% to -1.4% and perhaps most significantly the Retail trade (Year on year) figures came in 3% higher than the same period last year – a full 1.1% higher than the consensus.
• German CPI data was released almost as expected with year on year maintained at 2.4% and mom for November 0.1% down at 0%. Fortunately consumer confidence was up from 5.2 to 5.8.

DATA TO LOOK OUT FOR (all times GMT)

• At 10.00am Eurozone Consumer Confidence (Nov) is released; this is an important gauge of domestic market sentiment and is expected to remain unchanged from last month. Industrial and Economic Confidence figures, released alongside, are both expected to show declines.
• This morning Italy will attempt to auction off more 2 and 10 years bonds, traders are expecting a fairly poor result.
• Eurozone Finance Ministers meet today to continue discussions on Eurozone debt, again traders aren’t expecting anything particularly positive to emerge from the meeting.
• US Consumer Confidence (Nov) is projected to increase significantly at 3.00pm and US Housing Price Index (Month on month) (September) is also released.  

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).

Thursday started off quite gloomy for sterling, as the first bit of news, out very early on,

showed consumer confidence in tatters, according to the latest figures from Nationwide.

Nationwide said yesterday that it sees no improvement in consumers’ willingness to spend

for the remainder of 2011 after its Consumer Confidence Index recorded a score of 49 for

July, down from 51 in June and well below the long term average of 79.

Nationwide’s chief economist said “With the economic recovery still facing

strong headwinds, it is unlikely that we will see any considerable improvement in confidence

in the remainder of 2011. Indeed, we may see further deterioration in August following riots

in a number of UK cities and the sharp declines seen in stick markets around the world”.

Consumer confidence is now falling away after signs of improvement at the start of the year.

Households are tightening the purse strings in the face of living costs that are rising faster

than wages. Many employees have seen wages frozen or are having to shoulder below inflation

pay rises.

Germany’s consumer sentiment (GfK) came in at 5.2 points in September, following a

revision that lowered the August reading to 5.3. The preliminary data showed a reading of

5.4 for August. The September figure is in line with economists’ forecasts.

“Germans’ willingness to buy is surprisingly robust,” GfK said. “However, the worsening of

the international debt crisis and rising fears of a return to recession for the global economy

have clearly left their mark on the economic optimism of Germans.”

GfK said German consumers worry that global economic weakness will affect the domestic

economic boom if export prospects collapse.

The latest reading of the Ifo business sentiment index – released Wednesday – confirms

consumers’ view. The Ifo index hit a 14 month low in August after its sharpest drop since

2008, in the latest sign that growth in Europe’s largest economy is stalling.

The number of Americans seeking new jobless benefits rose for the second week in a row as

thousands of phone workers at Verizon Communications filed claims, government data

showed.

New applications for US unemployment compensation rose 5n000 to 417,000, the Labour

Department said yesterday. Initial claims from two weeks ago were revised up to 412,000

from an original reading of 408,000.

Although the claims data was boosted by the Verizon strike, applications for jobless benefits

remain at an elevated level normally associated with subpar hiring trends. In a strong

economy, claims usually fall far below 400,000 as companies rapidly add workers.

IN THE UK

• Investors worry as Nationwide Consumer Confidence Index records a score of 49 for July, despite being above consensus it shows a decline of 2 points and the lowest reading since April
• The report shows UK inflation is outpacing wage growth, putting pressure on household incomes at a time when government budget cuts are fuelling concerns about rising unemployment
• MPC policymaker, Martin Weale, said the Bank of England can hold fire on further monetary stimulus despite economic weakness and recent market turmoil, as the overall picture is brighter than it was in the run-up to the financial crisis. These comments are in line with remarks by fellow policymaker, David Miles.
• GBP/EUR hits a low of €1.1318 during days trading after opening at €1.1363 and GBP/USD hits a low of $1.6260 after its recent run up to 3month highs.

ELSEWHERE

• German GfK Consumer Climate comes out at a reading of 5.2 points in September, in line with economists’ expectations
• The worsening of the international debt crisis and rising concerns of a return to a global recession clearly leaves its mark of Germans’ economic optimism.
• In Switzerland, economic expectations slumped to the lowest level in more than two and a half years in August, sliding 12.5 points to -71.4, down from -58.9 points in July.
• The Swiss indicator for the inflation outlook also fell, with only 14.3% of financial market experts still anticipating inflation rates advancing on a six-month horizon, compared with 23.5% a month earlier.
• US weekly jobless claims rise more than expected, by 5,000 to a seasonally adjusted 417,000, the Labour Department said, adding that striking Verizon workers filed 8,500 claims for jobless benefits last week, after submitting 12,500 applications the previous week.
• The RBA in Australia expect inflation to be at 3% by the end of the year but have said they will be keeping interest rates on to maintain stability despite rising inflation.

DATA TO LOOK OUT FOR

• A very important day for UK data, at 9.30am revised Q2 GDP figures are released, expected to come out at 0.2%, expect significant sterling volatility if it much different to the consensus.
• 10.30 Swiss KOF Economic Barometer, the figure is expected to fall but will the CHF continue to weaken?
• 1.30pm in the US sees Preliminary GDP figures, Personal Consumption and Michigan Consumer Sentiment, analysts suggest the figures will be disappointing showing falls across the board.
• The highlight of the week for USD traders is Ben Bernanke’s speech at Jackson Hole this afternoon beginning at 3.00pm. There has been speculation about whether or not QE3 will be implement today or not and what the Fed have up their sleeves to help the US economy avoid re-entering recession. The markets will be closely monitoring his words and we can expect movement in all currency pairs

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.