15 December 2014

 
More Oil woe! Where do we even begin with this Symbian circle?
Opec output? Russian sanctions? USA output? Euro? Oil and currencies affect each other like a contagion.

We have to start with Russia more or less. News travels fast, and markets
react within nano seconds - and again this is one reason I keep pointing out -
that these forex platforms are highly dangerous and not advisable.

The Bank of Russia raised its key interest rate to a whopping 17 percent from 10.5 percent. And in a traders mind that is a sign of desperate capitulation!
How can such a massive hike boost its currency and attempt rescue its
largely oil export troubled economy? Massive hikes like this do not send signals that the government can control its own currency. Instead massive hikes like this are counter-productive and instill fear in market traders.

All in all the Russian Rouble value has sunk about 50 percent since January
This is because of the dual problems of sanctions and falling oil prices.

Oil is linked to the US Dollar and the average price of a barrel of oil now
has dropped below $56 from a summer high of $107. January crud oil
closing on the Nymex at 55.69 monday.
 
With the Oil currencies the worst affected are Norway and Canada. Both Norway and Canada are very large oil producers and with falling prices
both expect GDP forecasts to shrink dramatically, even when Norway cut it’s main interest rate by 0.25 percentage point to 1.25 percent, the move became counter-productive and rocked the currency markets to send the Krone down by almost 2 percent instantly. Now, Norges Bank estimates oil investments will decline by 15 percent in 2015 hence GDP forecast revision and signs of unemployment increase.


EUR/USD - as expected, short term weakness gathering. Support at the 1.2362 and if that breaks traders will push to the 1.2247. In the longer term, EUR/USD is in a downward trend since May 2014. The break of the strong support area between 1.2755 (09/07/2013 low) and 1.2662 (13/11/2012 low) is pointing to a decline towards the the 1.2043 (24/07/2012 low) where stiff resistance is expected.  

Pieter Bergli - DeLoren Trust Holdings

Forex education



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