The Year Started in the Red Zone

January 5, 2015

The world’s financial markets finished the first trading session of 2015 mainly with a drop. In Europe as such, due to weak macroeconomic data and ECB President Mario Draghi’s speech, the British FTSE 100 shed 0.28 percent down to 6,547.80 points, the French САС 40 fell 0.48 percent down to 4,252.29 points while the German DAX grew 0.42 percent up to 9,764.73 points.

In his speech ECB Chief Mario Draghi said that at this time there’s a chance the central bank won’t be able to fulfil its mandate to keep prices stable. Overall, investors had a negative impression of Draghi’s remarks which conveyed the idea of fragile and inconsistent recovery of the eurozone economy.

In the USA, stock indices closed predominately with a fall due to slack statistics – the Dow Jones Industrial Average grew 0.06 percent up to 17,832.99 points whereas the S&P 500 shed 0.03 percent finishing trading at 2,058.20 points, and the NASDAQ Composite dropped 0.2 percent down to 4,726.81 points.

Oil prices are on the decline as well. On the NYMEX, WTI oil futures for February went down by $0.58 making $52.69 a barrel. On London’s ICE, Brent oil futures for February dropped $0.91 and reached $56.42 a barrel.

Yesterday Iraq’s Ministry of Oil announced plans to increase oil exports in the new year. It would bring about a further drop in oil prices globally.

On the Forex market, EUR/USD started the new calendar year with a fall. A confident break out of the weekly triangle downwards means that the dollar will continue to get stronger in 2015. Currently EUR/USD is facing 1.1916, the support level of 2010.  If the pair gets over it, its next hurdle will be just the 9-year-old support level of 1.1825. As this rate was the support in 2006, it’s very likely that the pair would form new reversal levels of support and resistance. With all this said, today’s gap should be taken notice of. The pair may first close the gap.  

Anna Gorenkova, NordFX Analyst

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