Rouble not Russia’s only worry as Obama readies sanctions

Despite calming words from the Kremlin, and a reduction from yesterday’s highs, the rouble still failed to drop below 60 per dollar, as the Western world looks to this as an opportunity to punish Russia for its 2014 behaviour.

There was overwhelming support for the latest sanctions bill from America, as Obama pledged to put more pressure on Russia’s defence, energy and banking industries. The US showed no sympathy for Russia’s woes, and is willing to go ahead with a sanction without European approval. A new set of limitations on the country will worsen an already dire situation, and could lead to serious policy changes from Putin.

Whilst the rouble continued to give Russia a headache, its partner miserable in crime, Brent Crude oil, spent most of the day hovering under $60 per barrel. As Russia cannot do anything but keep pumping to try and keep one of its few exports alive, there was more bad news as US crude oil inventories came in at higher than forecast. Whilst the inventories were still down from last month, this reduction in American oil is too insubstantial to change oil’s fortunes.

The USA didn’t have the best day itself, as CPI fell to -0.3%, and core CPI came in at 0.1% following the oil price-crisis. Yet the Dow Jones managed to open marginally higher at 17103.5 as investors largely shrugged at the poor consumer index figures.

This could change when FOMC announce a flurry of statements this evening; this should see a fresh flux of volatility into the US markets at a time when they could do with as much stability as possible. However, if FOMC bring some positivity to the table, it could be the news that the US indices need to reverse their present slump. Regardless, FOMC will have a battle to make itself felt on the markets above the waves that the rouble and Brent Crude are causing.

As Ed Miliband and Labour overtook the Tories by 5 points in the latest polls, with the Conservatives sinking to their lowest rating since last May, George Osborne finally received some Christmas cheer as wages for UK workers rose 1.6%. This good news had no impact on the FTSE, as the UK index largely had a disappointing day of trading, until a late afternoon rally. Following a similar rally yesterday, the FTSE has found a trend of waiting until late to show any signs of life. However, it will take more than two late rallies to shake the feeling of limpness from the FTSE’s limbs.

Finally, the DAX had a day similar to the FTSE, marginally positive whilst firmly uninspiring. With the Eurozone’s final CPI coming in as expected, the DAX didn’t have much to cheer or cry about, whilst the ongoing problems in Russia continue to loom on the horizon. If today was quiet, tomorrow won’t be, as the EU Economics Summit begins. Draghi is expected to push for quantitative easing, and if anything can turn around the Eurozone indices, it’s a few whispers from the ECB President on economic stimulus.