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 pensionsor 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).
Data on Wednesday showed UK industrial order expectations had fallen more than expected in July. In a report by the Confederation of British Industry, industrial order expectations declined to – 10.0 in July, compared to a 1.0 reading back in June. Analysts had expected a decline in July to – 3.0 in July. A reading above 0.0 indicates increasing order volume is expected, whilst below indicates expectations are for lower volume.
For the first time in two years, optimism regarding the general business situation fell among UK manufacturers and expectations of slower activity are driving a reappraisal of forwardlooking business plans. Growth in total orders and production eased slightly in the three months to July and manufacturers expect a further deceleration over the next quarter.
Commenting on the report, Ian McCafferty, CBI Chief Economic Advisor, said “This slowdown is expected to persist into the third quarter. How far the slowdown will be borne out is yet unclear, but the combination of political and economic uncertainty is sapping confidence.” Over in the USA, official data showed that US durable goods also fell unexpectedly in June. The Commerce Department said durable goods orders dropped 2.1%, led lower by a decline in orders for transportation equipment, after a 1.9% increase in May. Analysts had expected orders to rise by 0.4% in May. Excluding transportation, orders edged up 0.1% after gaining 0.7% in May.
The pound still remained supported as talks on raising the US debt ceiling remained at an impasse, adding to concerns over a possible US debt default or downgrade ahead of the August 2nd deadline. The euro weakened earlier yesterday, also, amid fears that the Eurozone’s bailout fund may be insufficient to prevent sovereign debt contagion after Wolfgang Schaeuble, the German
Finance Minister, said that Berlin was against a “blank cheque” for the European Financial Stability Facility to purchase bonds on the secondary market. Late in the afternoon, EUR/USD dropped sharply back below the 1.44 as a failed topside rally
earlier in the day, saw a few weak longs start to bail. Risk-off is also increasing further as the Dow Jones maintains its triple-digit losses, whilst players are likely rolling their eyes at more worrying news that Unicredito shares have been suspended again, due to the excessive volatility of the markets.
Jean-Claude Trichet was trying to boost sentiment and argued that speculating over a Greek default will lead to heavy losses given the provisions put in place last week. He was also heard to have said that the EMU has fewer problems than the US and Japan, adding that they must address their public finances.
IN THE UK
• UK CBI shows a more than forecasted decline in July, falling to -10 this month from +1 in June, well below forecasts for a reading of -2
• Industry experts expect the slowdown in manufacturing to continue over the coming months.
• Quarterly manufacturing data, indicated the first drop in firms’ optimism for two years, as export demand weakened sharply
• The pound hits a high of $1.6438 against US dollar and €1.1364 against the euro
• Still no resolution on US debt ceiling talks, just 5 days to go, who is going to stand down?
• US June Durable goods orders fell 2.1 percent, weighed down by weak receipts for transportation equipment, after a 1.9 percent increase in May. Economists had expected overall orders to rise 0.3 percent
• US Treasuries prices pared earlier losses on the data, while the dollar extended losses against the yen
• Euro weakens amid fears that the euro bailout fund may be insufficient to prevent sovereign debt contagion
• Switzerland’s leading economic barometer fell more than expected in July, posting the largest monthly decline since April 2009. The KOF Economic Research Agency said its index of 12 leading indicators declined to 2.01 in July from 2.23 in June.
• Australian CPI for the 2nd Quarter climbed 0.9%, stronger than expectations of a 0.7% increase, RBA are to announce rate decision next week, some think after the climb in inflation there could be a 25bps rise in interest rates which will undoubtedly help to strengthen AUD further.
• Overnight Reserve Bank of New Zealand leave rates on hold but suggest they will reverse the 50bps emergency cut following the NZ earthquakes as soon as September.
DATA TO LOOK OUT FOR
• UK CBI Reported Sales for July are due out at 1100am, so interesting to see how this fares
• 1.30pm we have the US Unemployment claims which is expected to come out at 413K. Will this figures be under expectations??
• The US also has Pending Home Sales due out at 1500pm, forecasted to show a reading of -1.5%
• Later this evening, we will have the NZD Building Consents, month on month.
• A plethora of Japanese data is released tonight, Industrial Production, Unemployment, Consumer Price Index, Manufacturing Purchasing Manger Index, on the whole, looking at the consensus figures, markets are expecting the majority of the figures to fall.
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.
Russel Mori writes for Gerard Associates LTD, for more information on QROPS, QROPS Pensions, QROPS List, QROPS Providers, QROPS guernsey info available online.