The euro trade calm against the dollar at $1.2460 level

Good Morning,

- The Russian central bank early on Tuesday raised its key interest rate by 650 basis points !!, to 17 percent from 10.5 percent.

- Emerging markets remained under pressure from Asia to Latin America as investors dumped riskier assets, with the Indonesian rupiah skidding to a fresh 16-year low.

- The euro trade calm against the dollar at $1.2460 level as the market focus on Ruble and emerging markets.

-Investors also awaiting the Fed’s final meeting of 2014 on Tuesday and Wednesday. Federal Reserve officials are expected to decide whether to make a critical change to their policy statement that would widen the door for interest rate hikes next year .

- The ruble rallied, ending a six-day drop, after the central bank unexpectedly raised its benchmark interest rate by the most since 1998 to defend the currency. Policy makers boosted borrowing costs by 6.5 percentage points to 17 percent, bringing back memories of rates higher than 100 percent in 1998 when Russia defaulted on its debt, and spurring concern the move will hurt an economy that’s facing the prospect of a recession next year. The currency is the worst performer in emerging markets this year with a loss of 44 percent amid a slump in oil prices and U.S. and European Union sanctions over the Ukraine conflict.

- Goldman Sachs on EUR/USD: EUR/USD closed above the top of the pattern last Wednesday, re-tested the break point on last Thursday and has since turned back higher again, notes Goldman Sachs. "All in all, it seems EURUSD is gradually making its way higher from a textbook ending wedge. An ending wedge/falling diagonal occurs primarily in the fifth wave of a 5-wave sequence which fits this chart’s count quite nicely," GS clarifies. "It completes on a break through the top of the pattern and frequently precedes a sharp move higher. In this case, the wedge targets a move back to the Oct. 15th high (the top of wave 4) at 1.2888 near 38.2% retrace from the May ’14 high (1.2915)," GS projects. Further confidence in this view, according to GS, will be given by a daily close above the 55-dma at 1.2552 where the market hasn’t seen a close above this pivot since the actual May 8 th high. This technical set-up, according to GS, suggests that EUR/USD low may already be in for the year. "It is worth highlighting that the market has based at 1.2248 right above a trendline extended across the lows since Jun. ‘10 at 1.2230.

- Crude prices remained under pressure on Tuesday after OPEC once again said it will not cut oil output. UAE Oil Minister Suhail Bin Mohammed al-Mazroui said there was no need for OPEC to meet, reinforcing the idea that major Gulf producers are ready to wait out lower prices.

- The Bank of England today announced the results of the first concurrent stress testing exercise of the UK banking system. Alongside the stress test publication, the Bank of England also published its Financial Stability Report, which sets out the Financial Policy Committee’s assessment of the outlook for the stability and resilience of the financial sector, and the Systemic Risk Survey, which quantifies and tracks market participants’ perceptions of systemic risks.

- China's factory sector shrank in December for the first time in seven months as new orders declined, adding to a spate of data showing more fatigue in the world's second-largest economy and heightening expectations that more stimulus will be needed.

- New Zealand’s Treasury department said the budget will remain in deficit this year as falling commodity prices and weak inflation curb tax revenue, undermining the government’s pledge to deliver the first surplus in seven years.

- Watch today: PMIs, US housing, US PMI.

Have a nice Day !