Markets have started the year nervously and trends that were emerging at the end of 2014 are continuing into 2015. Crude oil and the euro are heading lower, the dollar is heading higher and meanwhile indices are struggling to decide what direction they should be heading in. But this morning looks like a degree of calm has re-emerged, in the FX market at least as AUDUSD bounces from the mid 0.8000 region (its May 2010 low) back to 0.8130 at the time of writing and EURUSD is hovering around 1.1950. EURUSD has also done well to hold ground given yesterday’s poor German inflation data which showed the EU’s largest economy ticking towards deflation. For now the dollar rally is just being kept in check but indices are still suffering somewhat from the bearish tone in crude oil. As long as crude prices continue to head lower, indices such as the FTSE 100 will struggle to achieve any upside momentum given their large weightings in the energy sectors.
Today many countries are observing Epiphany and enjoying a public holiday so volumes might be a little thinner than normal. On the economic data side things are a little busier with a string of services PMI survey releases from across the Eurozone and in the UK. A glimmer of light has shown on France already this morning which has seen consumer confidence a little higher than expected and whilst their PMI figure is due to rise from 47.9 to 49.8, this remains in contraction territory for one of the worrisome Eurozone economies. Later on this afternoon the US releases its services PMI numbers too and anything better than expected could see the dollar make its next leg higher.