Dollar dominates the first trading afternoon of the New Year

A rampant dollar set the tone for the US markets’ 2015 open, despite disappointing manufacturing data.

Like Europe this morning, the USA’s ISM manufacturing PMI figures were less than healthy, as the index hit a six-month low. However, the strength of the dollar, which has spent the day taking points off both the pound and the euro, allowed the Dow Jones to ignore the negative data to open stronger than its 2014 close. The increased beating of the Fed’s interest rate rise drum has spurred the dollar to near 9 year highs, and the greenback looks unlikely to let go of last year’s gains any time soon.

Unlike the US markets, the FTSE continued to fall this Friday, as weak oil was joined by a plummeting pound to increase the UK index’s woes on the first trading day of the New Year. The FTSE failed to ignore the poor manufacturing PMI numbers from this morning, and was damaged by the US open as the dollar continued to grow against sterling. The FTSE will be desperate for next week to begin, and normal trading to resume, so the index can stop wallowing in the meagre amount of data each day.

After struggling this morning following the poor PMI figures, the Eurozone indices began to process Mario Draghi’s comments finally took hold this afternoon with a widespread rally. As usual, Draghi’s dulcet dovish QE-tones were bad news for the euro, which already had a dominant dollar to contend with. However, whilst the Eurozone currency fell against the greenback, the dire day for sterling meant that the euro made gains against the pound.

This strong dollar was also a blow to gold, as the yellow metal fell on the back of the US currency’s stellar start to the year. Gold had a relatively stable, if uninspired, end to 2014, as oil drew most of the focus in the commodity-sector. However, this stability was relative, as gold still had suffered big drops in 2014. With the dollar continuing to negate the metal as a viable alternative investment, gold looks set to continue its poor-performance trend in the short-term.

Finally, the day wouldn’t be complete with a new crisis from oil. Brent Crude touched $55.49 per barrel this afternoon, another record 5 and a half year low for the commodity that keeps on providing awe at how poorly it can perform. With global manufacturing weakening, from China to the USA to Europe, and Russia and Iraq making production gains, for oil the New Year is much the same as the Old Year: abysmal.