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).
strength continues to be dictated by investor appetite or aversion to
risk. Against the euro the pound traded between 1.2751 and 1.2666
yesterday, ending the European session at 1.2675 and more than 1.5% down
on mid-July’s highs. Volatility suggests that investors are reluctant
to make long term moves, focussing rather on the short term.
morning saw the release of UK manufacturing PMI which missed
expectations of 48.6, with 45.4 showing further contraction in the
sector and representing a three year low for the Index.
Noble, CEO of the Chartered Institute of Purchasing and Supply,
explained these disappointing manufacturing figures as the result of ‘A
perfect storm of wet weather and weak confidence in the UK’.
the UK the BoE is not expected to make changes to the target asset
purchase of £375Bn or the Bank rate of 0.50%, meaning we will have to
wait until next week’s Inflation Report and press conference for
insights into the MPC’s outlook.
continued to lose ground over the course of the day as markets price-in
what could be the first signs of a coordinated set of measures from the
ECB and Fed today. If sentiment on both sides of the Atlantic is
considered hollow then we could see greater volatility over the course
of the FOMC meeting and after the ECB press conference at 13:30.
mirrored sterling’s losses against the single currency, beginning the
morning at 1.5691 and closing the day at 1.5586. In the lead up to the
European open today GBP/USD trades at 1.5553.
acknowledge the significance of central bank meetings in both the US
and Eurozone, and yesterday’s trading saw EUR/USD stay with a narrow
1.2279 – 1.2336 range. Mario Draghi has pledged to do ‘whatever it
takes’ to safe guard the euro, and speculators will be out to punish the
Eurozone should his sentiments fall short of expectations.
Federal Reserve signalled more strongly it will take new steps as
needed to boost the economy. After the European close USD rallied to
1.5530 against the pound and from 1.2308 to 1.2218 against the euro.
Treasury Secretary Timothy Geithner believes the ECB and the EU’s
bailout fund could be reapplied to help recapitalise weak European banks
and lower sovereign borrowing costs in favour of ailing economies that
need time to implement overhauls. Geithner urges immediate short-term
support for Italy and Spain, and belief in the ECB’s ability to do this
may have fuelled the USD rally.
ADP non-Farm Employment Change came in better than expected at 13:15.
The number of employed during the previous month was 163k as opposed to
121k forecasted. Whilst ADP provides payroll services to many US
corporations, pundits are still watching closely during the US earnings
morning saw manufacturing PMI data for Spain and Italy broadly inline
with expectations. US ISM manufacturing disappointed, posting 49.8;
50.3 had been the forecast in the face of June’s 49.7 figure.
- Spanish unemployment posted at -27.8k. This is a contraction of 0.6%.
have downgraded Cyprus’s credit rating again and placed the island
nation on negative watch because of the significant exposure it faces to
the Greek banking sector.
this morning AUD retail sales figures came in better than expected, and
greater than the previous post. The sector expanded 1% instead of just
0.6%. Also the Australian trade balance was fractionally positive at
DATA RELEASES (GMT)
GBP Construction PMI is expected to remain unchanged
Spanish 10-y Bond Auction throughout the day
UK MPC Rate Statement, official rate statement & Asset Purchase Facility
EUR minimum Bid Rate – expect to remain unchanged
ECB Press conference, the focus of which may be LTRO mirroring FED sentiment
USD Unemployment claims expected to rise from 353k to 375k
INTERBANK RATES (09.00 GMT)