The market appears very calm after all the drama last week. EUR/USD made a small move to the upside after the elections in Greece on Sunday and after that began a narrow range. The way things are going it appears the pair is not about to break below or above it any time soon and we will likely have to be patient and wait for Monday at the very least for any changes. In my opinion the target of this consolidation is somewhere around 1.1500, but once the pair reaches that level the bearish trend will likely continue and it will head for 1.1000 again.

Russia Will Spend $35bn on Its Economy

Russia is about to spend 2.34 trillion roubles ($35bn, £23bn) in an attempt to pull its economy out of the hot water after the drop of the oil prices and the value of its own currency, not to mention the economic sanction the country has been subjected to by the West over its involvement in the Ukrainian crisis.

Russia will spend most of the cash on federal loans, pensions and recapitalising its banks.
The country will also make public spending cuts.
Over the next three years most spending, apart military and social programmes, will be hit.
Earlier this month, the International Monetary Fund forecast that Russia's economy will contract by 3% this year and 1% in 2016.

Measures

Russia's government will spend about one trillion roubles to recapitalise banks through the issue of government bonds.
The plan includes a separate scheme to help recapitalise some banks with 250bn roubles, while 300bn roubles will be provided to Vnesheconombank, the state development bank.
There will be an extra 200bn roubles in state guarantees to finance investment projects, and regional governments will get 160bn roubles in federal loans.
Meanwhile, the government has proposed public spending cuts of 10% this year and 5% over the next two years.
The cuts have yet to be approved by the Russian parliament.

GBP/USD formed a doji candlestick in the daily filter chart right above the support at 1.5000 and began climbing. I think this is the beginning of a more long-term correction, because 1.5000 is a very serious support level, visible in the monthly filter chart as well. Not to mention that the pair has been in a consolidation for the past six years and that 1.5000 is the lower limit of the aforementioned consolidation. The question is whether the pair will be able to break below that level eventually or will the trend become bullish instead.

EU "Weakened" According to ECB Executive

 Considering the economic situation in the EU the following statement hardly comes as a surprise, but it is worrying that things have gone so bad that they're willing to admit it so openly.

 A top official at the European Central Bank (ECB) has warned that unemployment and low growth are undermining the foundations of the European Union.

Speaking at the World Economic Forum in Davos, Benoit Coeure, a member of the executive board of the ECB, said the bank could not create lasting growth as that was down to governments.
He urged governments to speed up economic reform.
On Thursday the ECB launched a €1.1 trillion economic stimulus plan.
Mr Coeure said: "We've done our part on Thursday. Others have to do their part."
He said there was "nothing" the ECB could do to lift the growth rate of Europe in a "lasting way".
"We can make it cheaper to invest, but people have to want to invest and that is the role of finance ministers, that is the role of government," Mr Coeure said.
'Entrenched unemployment' Mr Coeure said the ECB would be making that point at the Eurogroup meeting on Monday when the ECB holds talks with finance ministers from the eurozone.
"With low growth, entrenched unemployment - people being dragged out of the labour market - we are seeing the whole political foundation of the European project being weakened. This cannot last for too long," he said.
"Being patient is just a risk we don't want to take."
Record low interest rates have failed to boost the 19-country euro area.
So, the ECB plans to buy €60bn bonds each month from banks until the end of September 2016, or even longer, in what is called quantitative easing (QE).
QE in theory increases the supply of money, something that keeps interest rates low and encourages borrowing and therefore spending.

Much Ado About Nothing

The elections in Greece barely had an effect on the market, despite some of the apocalyptic predictions I saw last week. I admit I was quite concerned myself and closed all my positions just in case, but in the end the whole situation turned out to be much ado about nothing, because EUR/USD opened with a small gap which then it quickly recovered and currently appears to be in consolidation again. However, I still think that the bearish trend is still valid so the pair will likely continue on its way down to target 1.1000 soon.

The ECB rate decision and Mario Draghi press-conference definitely had quite the effect on the market because EUR/USD dropped almost 500 pips for less than a day and broke not only below1.1400 but below 1.1200 as well and is likely headed for 1.1000. The pair is in a state of freefall and if it keeps it up we might see it reach parity sometime soon unless the elections in Greece on Sunday turn things around. If they don’t I think we might have to prepare ourselves for the possibility of this pair breaking below parity. Either way the elections on Sunday will likely cause quite a bit of volatility and there will probably be a gap on Monday when the market opens again.

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Bank of England To Put Interest Rates on Hold This Month

All nine Bank of England policymakers voted to keep interest rates on hold this month, after two of them dropped calls to raise rates from 0.5%.

Two members of the Bank's Monetary Policy Committee (MPC), Martin Weale and Ian McCafferty, had been calling for a rate rise since August.
However, January's MPC minutes showed they felt a rate rise now might cause below-target inflation to persist.
Analysts are now predicting that rates will not rise until 2016.
Last month, inflation dropped to 0.5%, its lowest rate in more than 14 years and well below the Bank's target of 2%.
As inflation is now more than one percentage point away from the Bank's target, governor Mark Carney will have to write a letter of explanation to the Chancellor, George Osborne.
'Significant shift' The Bank has held interest rates at the record low of 0.5% for nearly six years, and analysts do not expect a change for some time.
Alastair McCaig, a market analyst for IG, said "any expectation that rates might rise in 2015 has now been quashed" and that the first or second quarters of 2016 "appear much more likely timeframes".
Mr Weale and Mr McCafferty have been voting to raise rates to 0.75% since the summer, so the unanimous vote marked "a significant shift in the expected path for interest rates" said Ben Brettell, senior economist at Hargreaves Lansdown.
"Many forecasters had been expecting the first rise to come later this year, but this now looks extremely unlikely," he said. "This further reinforces my view that they will remain on hold throughout this year and into 2016."
Lower oil prices and a supermarket price war could keep inflation below 1% for a number of months, he added.
The decision by Mr Weale and Mr McCafferty was "finely balanced" this month, the minutes said.
They believed that the sharp fall in inflation had been driven by temporary factors, but that there was still a risk low inflation may last.

China Raises Salaries of Civil Servants in an Effort to Combat Corruption

Critics have long said that low pay is one of the main reasons why corruption is so ramnant among Chinese civil servants. In an effort to combat it the Chinese governent is raising the pay of the aforementioned civil servants, starting from the very top - with Chinese President Xi Jinping.

The President and six other top Communist Party officials have been given a 62% pay rise, according to state-run media reports.

Mr Xi's basic monthly salary will increase to 11,385 yuan ($1,832; £1,209) from 7,020 yuan, the China Daily and Wen Wei Po newspapers said.
Civil servants will also be receiving their first wage increases since 2006, which will be backdated to 1 October.
The move comes amid efforts to combat corruption and increase productivity.
The lowest-ranked civil servants will see their pay more than double to 1,320 yuan or about $212, documents from China's Ministry of Human Resources and Social Security reportedly showed.
Mr Xi and six members of the Communist Party's elite Politburo Standing Committee will see the highest salary increase given their position and duties.
However, Mr Xi's new salary of about $22,000 a year will still be far less than that of his peers. US president Barack Obama, for example, earns a base salary of $400,000 a year.
http://www.bbc.com/news/business-30896205

Saudi Arabia Can Deal With Low Oil Prices For Many Years

Saudi Arabia can cope with low oil prices for "at least eight years", Saudi Arabia's minister of petroleum's former senior adviser has told the BBC.

Mohammed al-Sabban said the country's policy was to defend its current market share by enduring low prices.
"You need to allow prices to go as low as possible in order to see those marginal producers move out of the market," he said.
Mr al-Sabban advised the ministry for 27 years, leaving last year.
Saudi Arabia, the largest producer within the Opec oil producers' cartel, has repeatedly said that it will not cut output to try to boost the oil price.
Mr al-Sabban said Saudi Arabia's "huge financial reserves" would enable it to cope with the low oil price.
The country is now in the process of cutting government spending.
Without these cuts, Mr al-Sabban said, Saudi Arabia could not cope with low oil prices for more than four years.
Falling further Oil prices have more than halved since June.
The dramatic fall has been blamed on a sharp increase in production from North American shale companies, which has increased the supply of oil and gas, helping to depress prices.
Also undermining the price of oil are slowing global economic demand and a rising dollar against a range of other currencies.
The latter can flatter the oil price, which nonetheless can remain the same price in a local currency that buys fewer dollars.
On Monday, Brent crude was trading at around $49.40 a barrel, down 77 cents, and US crude was trading down 74 cents at $47.95 a barrel.
The falls came after Saudi Arabia said again on Sunday that it would not cut output to prop up oil markets.
Referring to countries outside of Opec, Saudi oil minister Ali al-Naimi said: "If they want to cut production they are welcome. We are not going to cut, certainly Saudi Arabia is not going to cut."

EUR/USD continued dropping today and fell over another 100 pips, reaching 1.1460. Nothing seems to be slowing down this pair any more. I admit this is one of the most impressive drops I have seen in the past few years – the other being, of course, the LCrude drop. That said, I do wonder when will the EUR/USD pair begin correction. There are no more serious support levels on its way down as far as I can tell, but obviously it cannot fall forever. The more it falls, the more suspicious and tense I feel.

The bearish EUR/USD trend continued today. I was expecting that range would last longer than it did, but apparently it was just a very temporarily setback before the pair dropped to 1.1567 forming a new historic low – the pair hasn’t dropped this low since 2003. I have little doubt now that the pair will reach parity eventually but I do have to wonder, however, just how much longer can it keep dropping without a more long-term correction first? Although there are no signals that correction is about to begin, I think it should happen sooner or later. The lower it drops, the more nervous I feel about opening new short positions.

The EUR/USD consolidation continues. Even though the pair fell today and made a new low at 1.1726 later it bounced back so the bearish trend is not continuing just yet. Range, however, continues and I actually did not resist temptation and opened a new long position. I did it just as the pair started dropping again, so you can imagine how pleased I was when it bounced back. But, all is well when it ends well – I managed to close it and make a profit, although I doubt I will be doing that again any time soon. I think I will just sit tight and wait for the bearish trend to continue before I open any new positions.

Consolidation continues for EUR/USD. Unlike yesterday the pair did test the support around 1.1750 but could not break below it and bounced back. It looks like we are in for some range – the channel is quite clearly defined by now. I admit that when it is so obvious I am tempted to trade range, as much as I dislike doing that, and I might just do it. I just have to suppress the temptation to open any positions in the middle of it – that is always a poor idea. I wonder how long range is going to last this time – I don’t know about you, but I’ve noticed that range always seems endless to me. It always seems to actually end just when you’re about to go give up waiting.

US to Strengthen Laws on Privacy and Data Breaches

US President Barack Obama is set to propose three new laws that all deal with the way data is handled.

One will require companies to let customers know within 30 days if their personal information went astray in a data breach.
Another will attempt to give people more control over what can be done with the data companies gather about them.
The third law would ban educational software makers from selling data they collect from students.
The proposal on data breaches comes after a year in which many large US retailers, including Target, Home Depot, Staples and Sears, were hit by cyber-thieves keen to scoop up payment-card data.
To become US law, the proposal must get through the US Congress. Currently, different states have different disclosure regimes, many of which are more than 10 years old.
On data privacy, Mr Obama is believed to want to resurrect a "consumer privacy bill of rights" that was first proposed in 2012 and which would ensure consumers are consulted before data gathered from their online activity is analysed or sold.
Exact details of the proposals will come to light during a speech Mr Obama is due to make at the US Federal Trade Commission on 12 January. The speech will act as a preview of the State of the Union speech Mr Obama is scheduled to give on 20 January.

It looks like EUR/USD could not break below the support at 1.1750, formed a hammer candlestick and then a double bottom, both visible in the four hour filter chart, and then started climbing. It appears that there will be some correction, which was to be expected, considering the long bearish trend. It will likely reach target 1.1920, where there is pretty strong resistance also visible in the four hour filter chart. I doubt correction will last long or that the double bottom signifies a reversal – the trend is still very much bearish.

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EUR/USD broke below 1.1860 – which was a multi-year low - with ease and will soon reach 1.1800. The bearish trend is so strong that I think it is likely it will continue towards target 1.1700. Also, I know that I have often talked about this pair reaching parity, but up to this point this has always been idle speculation on my part. However, now that I look at this bearish trend I am starting to consider the possibility more and more seriously. The all-time low for EUR/USD is 0.8200. The question is, just how low can the pair drop now?

I admit that I felt a little disappointed when I saw the new doji candlestick on the weekly USD/JPY filter chart. Here I was, expecting the pair to test the previous high at 121.40 and then continue climbing, and instead it formed a possible reversal pattern candlestick. It is, indeed, time for a correction, so I should not have felt this surprised. I am tentatively considering opening some short positions, but that decision depends on the candlesticks that will form in the 4 hour and the daily filter charts.

EUR/USD not only reached 1.1950 but it even dropped way below that, reaching 1.1850. While I had my suspicion that something like this might happen, I certainly did not expect it would happen so quickly. And while the pair bounced back a little, I now think that we might actually see it reach 1.1800. I think I will keep my short positions open for a little while longer, but I definitely do not feel comfortable opening new ones. It looks like EUR/USD is in a state of freefall, but then again, it really is high time for some correction.

It appears that the bullish trend continues for the USD/JPY pair, which has been testing and  trying to break above the resistance around 120.80 for sometime now. Of course, if does manage to break above that resistance it will then have to break above the resistance level at the last high, which is 121.90. In case the pair breaks above both levels, it will likely head for target 124.00. Either way, we will have to wait for the beginning of next week for any new development.

Happy New Year! 2014 is over and we celebrated the coming of 2015. I hope you all had a good time and managed to rest and relax because now that the holidays are over everything is going back to normal and the market has finally started moving.

Holidays or no holidays the bearish EUR/USD trend continues and the pair will likely reach 1.2000 quite soon. I don’t know about you, but I am keeping my short positions open and I will wait for it to reach target 1.1950 before I consider closing them. Depending on the situation, I might wait for the pair to reach 1.1900 before doing so.