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Pushing new highs

There were some interesting dynamics on FX markets yesterday, as statisticians chopped away at UK growth and added to the US economy. The net result was cable moving one big figure on the day down to the 1.55 level. The revisions to the US economy put it at the stronger pace of 6 months growth for nearly 12 years. The dollar index pushed above the 90 level for the first time since April 2006, with the dollar having risen for 6 consecutive months now. The other significance is that this breaks the dollar out of the range that has dominated in the post-crisis era, so gives a very strong technical signal going into year end, especially if the gains are sustained into year end. Naturally, the data also supported equities and the Dow above the 18,000 level, new highs for the year.

Activity will be much lower today with many markets closing ealy ahead of the Christmas holiday. Data and events are thin on the ground, beyond the weekly claims data in the US. Beyond the majors, note that the Russian rouble continues to stabilise, with the authorities yesterday encouraging firms to repatriate roubles to dollars in the more sedate market conditions.

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