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Forex: Commodity slump spoils Christmas rally

Further weakness in commodity prices is unsettling investors during this historically very bullish month for equity markets. December usually sees indices rally as Christmas cheer engulfs investors and half an eye looks into the crystal ball for what might be in store in the year ahead, however this time the future looks murky with commodities continuing their downward spiral. Nymex crude has been especially in focus as it smashed below the $40 a barrel mark yesterday and we’re now back to the lows of 2008/09 at the height of the financial crisis. These levels should see support for crude prices at these multi-year lows, but with no action to restrict production from Opec it will take some brave bargain hunters to dip their toes into the market. That seems to be the case for the moment at least with crude prices just a little higher this morning.

Overnight the Japanese economy was a bright spot with Q3 GDP expanding 0.3%, recovering from its most recent recession which gave USDJPY a little boost bringing it back towards the 123.00 level. This morning sees UK industrial production at 9.30 GMT which could test whether GBPUSD can hold onto the 1.5000 level.

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