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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

• Producer Price Index figures on Friday morning in the UK showed a fall in prices that manufacturers buy and sell at. The pound was left mainly unaffected after the announcement but values fluctuated later on as overseas developments took place.
• During the course of the day the pound made gains versus against the euro as rumours circulated trading floors that several Eurozone nations would be downgraded, GBPEUR rallied back through the psychological €1.20 mark to hit a high of €1.2091 late in the evening.
• GBPUSD didn’t fare so well, falling to a 18 month low of $1.5234 tracking a fall in EURUSD as concerned investors head to the reassurance of the safe haven currencies.     
• George Osbourne will sign a deal today with Hong Kong to help the City of London become a offshore trading centre for the Chinese Renminbi.

ELSEWHERE

• The main news last week was S&P’s decision on Friday to downgrade the credit ratings of 9 Eurozone member states, the most notable of these were France and Austria being downgraded from the top tier AAA rating.
• Concerns now surround the European Financial Stability Facility as France and Austria’s downgrade mean the fund could lose its own AAA rating and potentially  €180bn of lending capacity.  
• Sentiment over Europe had started to improve last week and bond auctions went well, EURUSD had risen sharply to a high of $1.2874 before losing over 2 cents to fall to $1.26342 ahead of the S&P announcement.
• Adding to Eurozone woes were threats of a Greek default increased after talks to restructure the country’s debt broke down. Negotiations failed over the size of the haircut to be taken by banks.
• Following the French downgrade, EURJPY hit a fresh 11 year low of 97.15yen, the euro under obvious pressure and yen benefiting from it’s safe haven status being both contributing factors.  
• In the US, some of the optimism about housing, consumer spending and the broader economy eased back a bit last week, amid a splattering of weaker economic reports. Retail sales rose just 0.1% in December and core retail sales fell by the same amount. Holiday sales came in right in line with expectations, rising 5.1%.
• US weekly first-time jobless claims spiked up to 399,000 and job openings listed in the JOLTs survey fell slightly..
• Former MoF official Sakakibara (aka Mr. Yen) expects that Japan could be downgraded soon; Strong Yen is likely to continue, however any intervention in the market would most likely be unsuccessful without the help of the US.

DATA TO LOOK OUT FOR (all times GMT)

• A relatively quiet day for data today, markets will be accessing the fallout from Friday European downgrades and how they will affect the Eurozone crisis.
• Eurozone President Draghi speaks this evening at a press conferences with Q&A, he will undoubtedly face many questions about the severity of the downgrades and how they affect the EFSF.  
• Business Confidence Figures are released in New Zealand tonight at 9.00pm

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.

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 held interest rates as expected at the record low of 0.5% and left quantitative easing unchanged at £275 billion. This came as no real surprise as in the past the Bank of England have preferred to see the full effect of the extra funding in the economy before making any further decisions.
• Despite the troubles in the economy the pound has managed to show some strength during this recent turmoil as <?xml:namespace prefix = st1 />UK government bonds are seen as a safe asset. The yield on 10-year UK bonds fell to a record low on Thursday on the back of demand for UK debt.
• The average price of a home in England and Wales rose 0.2% from September to 220,056 pounds, the groups estimated in an e-mailed report in London today. The number of transactions fell 5.7%. In London, prices rose an annual 2.5% in the three months through October. 

ELSEWHERE

• After a week of negotiations Lucas Papademos has stepped up and will be sworn in as Greece’s new Prime Minister. A former Vice President of European Central Bank, his credentials at the pinnacle of the finance community should help him repair Greece’s battered economy.
• Following a better than expected Italian bond auction, the yield on 12 month Italian government bills has fallen slightly, helping to calm fears of Italian debt problems as government debt hit a euro-era high earlier in the week.
• The announcement of a new government in Greece and the naming of a new leader has helped reduce risk aversion. Stock markets performed better in the Asian session this morning and European stocks have opened higher.
• EUR/USD has followed suit and moved up, breaking through the $1.36 mark from an earlier one month low of $1.3482
• Credit ratings agency Moody’s had to re confirm France’s Triple A rating as a falsely leaked memo said the nation had been downgraded. The French Finance Ministry have asked for a full investigation.
• The European Commission said Eurozone growth is expected to slow down next year and may even slip into recession due to the prolonged debt crisis hurting investment in the Eurozone. Outlook has been lowered to 0.5% for next year down from the 1.8% forecast in Spring
• Spanish debt seems to be holding up on the bond markets, the markets are largely ignoring the upcoming general election on Nov 20^th and the potential new administration.
• In Japan the authorities have been silently propping USD/JPY over the last few days, this helps to explain USD/JPY inability to test below 77.50, near to the benchmark the authorities seem to of set as near the max strength they will allow the Yen to be at.
• New unemployment claims in the US fell in the first week in November, according to a report released by the Labor Department, with claims coming in below 400k, lower than the expectations of most economists.

DATA TO LOOK OUT FOR (all times GMT)

• Veteran’s day in the US will mean the markets should be quieter than usual, although announcements involving the European debt crisis could have an impact on currency prices
• UK Producer Price Index (input and output) figures are released this morning, generally high figures are good for the UK economy, but experts believe all 4 components of the figures will fall.
• Preliminary gross domestic product estimates from Spain is the only major European news out today
• Michigan Consumer Sentiment Index for November is released at 2.55pm in the US and consensus is for a slight improvement.

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.