Ruble Collapse

The tattered Russian ruble dropped to a record low against Greenback again yesterday, as traders became increasingly sceptical over Russia's surprise decision to raise interest rates to 17 per cent. This was the latest attempt from the central bank to ease pressure on the crumbling currency from falling oil prices and western sanctions. The ruble rallied initially touching 60 vs USD, recovering some of its significant losses on Monday – when it suffered its largest one-day fall since 1998. However, the recovery proved short lived, hitting 78 in the afternoon session and now sitting at 64 in early morning trading. So far this year, Russia has raised interest rates 11.5 per cent amid market turmoil linked to the Ukraine crisis, and such a high rate will likely further halt economic growth.

Back to the UK and the according to the latest figures, consumer price index inflation dropped to a 12-year low of one per cent in November falling from 1.3 per cent the previous month.

The ONS claimed that the figure reflects drops in transport costs, particularly for fuel, air travel and second-hand cars along with recreational and cultural goods. The figures support Mark Carney's view that inflation is "more likely than not" to keep falling in the coming months and that growth will be slightly weaker due to a global slowdown. The lower inflation rate means it is less likely the bank will raise interest rates from a record low of 0.5 per cent anytime soon.

Today we have Bank of England minutes and Employment data from the UK at 9.30am. Unemployment is expected to fall by 0.1% to 5.9% and there will also be a close eye on earnings, especially given the weaker inflation yesterday. Elsewhere we have US inflation at 1.30pm and the Federal Reserve Meeting and rate announcement at 7.00pm GMT.