The festive period has proven hard to navigate once again as low volumes have taken their toll on financial markets. This morning the City of London is empty and this is reflected in the paltry volumes being traded on the FTSE 100, which at least looks to be ending the year with a spring in its step. One of the major issues that FTSE investors still face is the benchmark’s inability to break through to new all-time record highs, whilst across the pond US indices have been going from strength to strength. Rich pickings are scarce and investors need to select carefully in 2015.
On the currency side the dollar has been grinding higher throughout December as investors jump on board of one of the most talked about trades in FX of 2014, particularly in H2. This is unlikely to change in 2015 however with the dollar index rising 12% in the past 6 months, the best part of any early gains has already been made and pull backs are possible. All eyes will remain focused not only on the language of the Federal Reserve, but US economic data and yesterday’s worse than expected US consumer confidence has taken the shine off the dollar’s rally in these final stages of the year. EURUSD in particular is susceptible to losses as the profit taking in the dollar over the past 24 hours has not corresponded with euro strength and especially since expectations of sovereign debt purchases by the ECB build. In the past few days over the festive period EURUSD has simply tracked sideways around 1.2150 as if it’s waiting to make the next move lower.
Whilst 2014 ought to be remembered as the “Return of the Dollar” it will probably be marked down in history as the “Ruin of the Ruble”. In 2015 investors will have to weather various storms and politics will play a major role with risks coming from Greek and UK General Elections to name just a couple of examples.
Happy New Year!