The dollar and the oil price look set to dominate financial markets in 2005, just as they did in 2004. While investment banks were suffering from a lack of volatility, weak equity issuance and a quiet period for mergers and acquisitions, trend followers on banks' trading floors could at least make money following the diving dollar and, for much of the year, the soaring oil price.

The dollar's decline, from $1.18 to the euro in April to more than $1.34 earlier this month, came against the background of fears at the start of the year about the durability of the US economic recovery and the outlook for jobs. Concerns about the turmoil in Iraq and the rising oil price followed, after which came worries about the US election.