Forex news for December 16, 2014:

Volatility was the story of the day in just about every asset class. The final chapter was risk aversion with the S&P 500 closing on the lows, down 16 points to 1979. At midday the market ripped up to 2017 in a relief rally as oil briefly jumped $3.

The ruble was the major story as it continued to collapse despite the massive hike in Russian interest rates. USD/RUB jumped as much as 23% as a panic set in. That spilled over to risk trades and knocked USD/JPY down to 115.57 — just above the 38.2% retracement.

EUR/USD seems to be benefiting from outflows from Russia. As the fears peaked, EUR/USD climbed to 1.2569, up about a cent on the day. As Russia began to stabilize it sagged back down to 1.2480 but some bidders have stepped in there twice to form a minor double bottom and a bounce to 1.2515.

Similar story in the UK, which has long been the port of choice for Russian money. UK CPI numbers were soft today and that sparked an initial drop in cable down to 1.5612 but it turned around in a big way and ripped to 1.5784 with the peak coming at the start of US trading. Most of the session was spent consolidating in the 1.5725 to 1.5760 range.

The Canadian dollar weathered the oil drop and pop well, likely due to the Talisman deal. The pair slipped down 1.1607 then bounced to 1.1640.

The Aussie didn’t far as well. After a pop to 0.8275 in Europe it faded to 0.8210 in US trading and remains within striking distance of fresh cycle lows.

Overall, it’s a very dangerous market that’s trying to tell the Fed to be careful. Will Yellen listen?

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