Global markets react following Russian central bank’s dramatic move

Tuesday, December 16, 2014

Russia tried to defend the Rouble with the biggest interest rate rise since 1998. Following a surprise announcement, the Russian central bank increased its key interest rate to 17% from 10.5%, effective today. The interest rate hike prompted initially a strong rally of the Rouble towards 58.26; however, it seems that the rally was short-lived as Rouble came under renewed pressure this morning, trading around 66.0.

USDRUB

USDRUB Curncy (Russian Ruble SPO 2014-12-16 09-09-36

Brent front month futures breached key support at $60/barrel for first time since July 2009, trading 2.5% lower in early trade this morning. WTI front month futures extended recent declines towards $54 per barrel. The sharp sell-off in the oil market continues as OPEC has failed to act while oil fundamentals continue to remain very bearish following ongoing builds in crude, gasoline and distillate stocks.

Brent front month futures

COF5 Comdty (BRENT CRUDE FUTR  J 2014-12-16 09-10-20

China’s HSBC manufacturing PMI fell to 49.5 in December (preliminary) from 50.0, missing analysts’ expectations. The Hang Seng index plunged over 350 points (-1.57%) to finish at 22,670.50. The Nikkei index tracked the downtrend and posted fresh losses retreating over 340 points (-2.01%) towards 16,755.

European equity markets gave back earlier gains and came under renewed pressure this morning. Investors remain cautious following the Russian announcement, while political uncertainty in Greece continues to weigh on market sentiment. Market participants will be keeping an eye on the Greek presidential election with the first round of voting tomorrow.

The EUR rallied towards 1.25 against the US dollar. In the meantime, RBS and Lloyds managed to pass Bank of England stress tests while Co-Op Bank failed.

EURUSD

EURUSD Curncy (EUR-USD X-RATE)   2014-12-16 09-08-30

Germany’s Markit manufacturing PMI rose to 51.2 in December from 49.5 in November beating strongly analysts’ expectations.

 

Events for today:

 

0145

CN

Nov

HSBC Manufacturing PMI

0830

DE

Dec

Markit Manufacturing PMI

0930

UK

Nov

CPI & PPI

1000

DE

Dec

ZEW Survey expectations

1000

EZ

Oct

Trade Balance

1330

US

Nov

Housing Starts

1330

US

Nov

Building Permits

 

All times UK Local Time

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