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).
Yesterday continued on with the March madness, with the euro benefiting against its major counterparts.
The European Central Bank talked up speculation for rate hike in the first-half of 2011 and the near-term rally in the single-currency may gather pace going into the end of the week.
As expected, the ECB held the benchmark interest rate at 1.00% this month, but went onto say that the risk for inflation have moved to the “upside” on the back of higher commodity prices. This saw the euro strengthen to €1.1670 against sterling as Trichet spoke.
ECB President Trichet sat on the fence and said that the ECB may raise interest rates in the near term but this is not confirmed, which lead investors to move into the single currency.
The euro is pushing up to $1.40 on the USD to equal the highs of August 2010. However the near-term rally in the Euro could come under pressure as there is still a risk of Portugal tapping the European bailout fund.
The British Pound tumbled to a low of $1.6257 as the PMI figures reinforced a weakened outlook for future growth. PMI fell back to 52.6 from 54.5 in the January after forecasts for a 53.7 result, pushing the pound down against the board. However, as cable maintains an upwards trend due to the growing speculation regarding the Bank of England interest rate decision scheduled for the following week we may see a run at $1.64 and the 2010 high of 1.6456.
U.S. dollar price action was mixed yesterday with the ISM Non-Manufacturing index falling to 59.7 in February from an expected 59.9. The Dollar is still suffering on the back of surging oil prices and traders seem to be looking elsewhere for a risk aversion against Middle East crisis. This comes amidst talks of the dollar losing its safe haven value; this has lead investors to move into the Swiss franc as a risk free currency, pushing the Franc higher.
In today’s news we have the highly anticipated U.S. Non-Farm Payrolls report due out at 1330 GMT and US unemployment figures. Non-farm payrolls are due out at 183k compared to a previous 36k and unemployment rates at 9.1% compared to 9%. Both are expected to strengthen the dollar and provide some much needed support for the greenbacks, as it threatens to break new highs against both the Euro and Sterling. One eye must be kept on the Middle East as well to see how the markets deal with the risk aversion to the situation.
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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