QROPS update 10th September 2012 Pension drawdown and QROPS & QNUPS

UK

• In early European trading on Friday, sterling rallied against most major opponents, aside from the euro as investors purchased high-yielding assets after the ECB unveiled a bond-buying program to fight the European debt crisis and poor unemployment data in the US opens the door for QE3.
• UK industrial production in July expanded at the fastest pace in 25 years as activity picked up from June's extra-holiday driven weakness. July's rebound has raised hopes of better growth prospects in the third quarter, a view shared by the NIESR. The National Institute of Economic and Social Research (NIESR) published its monthly GDP update on Friday estimating the economy has grown 0.2% in the three months to August. NIESR's GDP estimate goes in line with the latest data pointing to strong industrial growth.
• GBPEUR hit a low of 1.2481 late in Friday’s Asian session, after a high of 1.2613 set early Friday morning. The euro is currently trading at its strongest level against sterling in 2 months. There continues to be a test of this 1.25 support now, after spending all of the weekend within 20 pips either side of 1.2500, many analysts are now predicting this could be the limit of gains for the euro and expect a recovery for sterling this week.
• Cable is in a similar position now, flirting with the landmark 1.60 rate again this morning. GBPUSD hit a low of 1.5922 and a high 1.6033, finally reaching significantly above the 1.6000 psychological level.

WORLDWIDE

• In the US, there is further evidence that QE3 could be on the cards now after data for Payrolls came in weak at 96k against expectations of 130k whilst US Unemployment came in slightly better than forecast. It was immediately after this news that cable broke through 1.60 to trade its highest level since May 16th.
• Markets seem to be waiting on the next move from the US now, with the focus on this afternoon's meeting between Federal Reserve policy makers who are expected to announce new plans to stimulate a sluggish US economy in response to a disappointing jobs report.
• The euro continued its rally against other major currencies in the European session on Friday on risk appetite following an upbeat German exports data and ECB bond buying measures introduced yesterday.
• German exports bounced back unexpectedly in July, despite the debt crisis significantly disrupting trading activities across Europe. Imports also recorded a surprise recovery, reflecting the still-strong private consumption in the economy. However, the spreading debt woes in Eurozone prompted the Organization for Economic Co-operation Development (OECD) to downgrade the growth forecast for Germany. The German economy is now seen growing 0.8% this year, down from the 1.2% expansion projected in May.
• Australia's trade balance showed a much worse than the expected deficit of $556 m in July, well below its $9m surplus in June. However, immediately following the weak trade balance data, the Aussie dollar recovered some of its losses. The Aussie advanced to a 1-week high of 1.0305 against the US dollar, 8-day high of 81.36 against the yen and a 4-day high of 1.2266 against the euro
• Switzerland's unemployment report showed that the seasonally adjusted jobless rate rose to 2.9% in August, unchanged from July. The Swiss franc fell notably lower against its major rivals early Friday as the market continued to speculate that the Swiss National Bank would raise the EURCHF cap from the 1.20 level. The franc has lost 125+ pips in the past 2 days against the euro, hitting as low as 1.2139, its lowest level since March 15, GBPCHF also slipped to a fresh 2-week low of 1.5295.
• Canadian Unemployment registered in line at 7.3% whilst the net change in employment improved. The immediate impact saw seen USDCAD drop from 0.9816 to 0.9780 and is currently trading at 0.9784, the move lower represents a fresh low for the pair since September 2011. The Ivey Purchasing Managers Index was at 62.5 on a seasonally adjusted basis in August, indicating that purchasing activity in Canada expanded from July.

INTERBANK RATES (09.00 GMT)