Despite the fact that most of the global stock markets registered their best performance in recent years in 2009, some who invested in shares have, even taking into account dividends, lost money over the decade 2000-2009. However, the year 2009 will be remembered as the year of the spectacular rebound after the collapse of equity markets in 2008 in the wake of the worst financial crisis since the Great Depression of the 1930s.
As for commodity markets, in 2009 markets experienced their best year since 1973, boosted by the unprecedented increases since 2000 in oil, sugar and copper. Gold has ended the year higher for the 9th consecutive year, a gain of about 25 per cent over the year 2008, after reaching a historic high at $1,226 .10 per ounce in early December. Oil ended the year close to $80 per barrel, an increase of 78 per cent, the highest for 10 years.
What are the performances on the Forex market you may ask? Contrary to the idea, articles, comments or statements indicating that the foreign exchange market (Forex) is volatile, fluctuations on the currency market are less than those found on other major markets. As shown in the table, the largest change recorded on major currency pairs traded is a drop of 26.31 per cent over 2008 and an increase of 10.54 per cent over 2009 for the currency pair pound sterling versus dollar, whereas stock and commodity markets show regular annual performances beyond 30 per cent. The foreign exchange market is not a more volatile market than others, only the used leverage multiplies the performance!
The first trading week of 2010, which marks the return of investors after the end of year period, is generally very important, as it often indicates a tendency for the first quarter of the year. Until now, early reports have come from US leaders: the chairman of the Fed, Ben Bernanke, said that important regulations are the best ways to prevent another crisis, but the Fed must also remain open to tightening of monetary policy.
With the return of economic growth and the cessation of purchases of securities by the Fed, the market expects higher interest rates in the United States faster than its main rivals, which supports the greenback. However, the US economy is experiencing a difficult recovery. The publication of the employment figures for December is widely expected tomorrow.
If the employment figures prove, like those of November, much better than expected, then market expectations should shift towards an even faster than expected tightening of monetary policy by the US central bank, which would encourage investors to push the euro against dollar to test a very important long-term support, the 200 day moving average, very popular with hedge funds and currently at 1.4240. In the case of a clean break, a violent fall is not excluded.
Upcoming FX key events
Today: Bank of England Monetary Policy Committee. Tomorrow: US Employment Report.
FX technical key points
EUR/USD is bearish, target 1.3750, key reversal point 1.4800
USD/JPY is bullish, target 98, key reversal point 85
GBP/USD is bearish, target 1.5050, key reversal point 1.7000
USD/CHF is bullish, target 1.1000, key reversal point 0.9950
AUD/USD is bearish, target 0.7800, key reversal point 0.9400
NZDUSD is bearish, target 0.6200, key reversal point 0.7650
Mr Longchamp is head of trading at RTFX Ltd.
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