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 or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, 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, QROPS and now QNUPS (Qualifying non UK Pension schemes).
Gross Domestic Product in the EMU grew by 1% in the second quarter according to European Statistics agency. This was the strongest quarterly expansion since the second quarter of 2006. The troubled euro zone economy grew at the fastest pace in four years in the second quarter of 2010 buoyed by strong exports however consumer spending fell short of expectations. The statistics agency showed a growth of 1.9% compared with the same quarter in 2009.
Germany’s factory orders rose 3.4% in August from the previous month according to the data released by the nation’s economic ministry the report showed that new orders for capital goods were up by 6.7% whilst orders for consumer goods were down by 3.9%. Immediately after these reports EUR/USD saw little reaction trading at $1.3827 whilst the EUR/GBP gained in its momentum by jumping 10 pips on the release pushing to a new 5 month high at the 0.8730 barrier (€1.1454).
In the US however the ADP employment report showed that private payrolls dropped by 39k in September. This lead to a dollar sell-off amid fears that the non-farm payrolls report due to be released on Friday (8th Oct) will not be as promising as expected.
A debate has been taking place between U.S. Treasury Secretary Geithner and Chinese Prime Minister Wen as things get a little hotter in the currency battle pushing USD/JPY below 83. Geithner warned that he sees "damaging dynamic" in currency policies and called for more flexible emerging market currencies. However the Chinese government is enticing more countries across Europe in a bid to get them on their side in regards to currency reforms.
Wen blame the Euro’s strength on the Dollar weakness and not the Yuan.
In Brussels he promoted the continued growth in the relationship between China Europe stating that exports to the EU had risen by 42% in the first half of 2010. He stated that China had helped countries like Greece, Iceland, Spain, Portugal and Italy by buying their debt which has in turn had been pivotal in maintaining the stability of the Euro.
Wen admitted that there was a need to increase the value of the Yuan but would do this gradually in order to maintain the stability of the Chinese currency.
Although this is a change in tactic, it is likely to be a successful move by China, who is flush with cash and has the upper hand while Europe cannot afford to lose a big buyer of bonds at a time when sovereign debt troubles still turn some investors away.
Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for 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.
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