Market Analysis

Euro is down 0.5% in relation to the dollar following military escalation in Ukraine

FOREX

The euro lost more than 0.5% in relation to the US dollar following news that Russia had started a large military operation in Ukraine in the early hours of the morning this Thursday. The single currency’s exposure to this crisis results from the potential economic impact of the ongoing events on its eastern flank, which are likely to compound the continent’s ongoing energy crisis, feeding into the broader inflation narrative and hampering the economic recovery prospects of the Eurozone. Also playing against the single currency is the increase in flows to haven currencies, such as the yen, Swiss franc and US dollar, that occurs whenever uncertainty grows in the financial markets. There may be some testing times ahead for the single currency, which may soon see it breaking below the $1.12 mark.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD

Gold prices rose by more than 2% as Russia launched a large-scale military operation in Ukraine this Thursday morning. Investors are diverting investments from riskier assets, such as stocks, to traditional safe heavens, increasing demand for the precious metal and supporting its price, in a dynamic that creates scope for further gold price gains as the conflict, which will include economic retaliation from the West, and counter-retaliation from Moscow, unfolds and keep high levels of uncertainty in the financial markets.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

OIL

Brent crude oil prices rose above $100 for the first time since 2014 during early Thursday trading, with the cost of the barrel climbing more than 5% as Russia started it’s invasion of Ukraine. Moscow’s intentions to launch a military attack on its neighbour had been called out over the last few weeks by several western agencies and governments, generating a narrative that, amidst broader supply shortages, contributed to support the rally in oil prices seen since the end of last year. As a full military assault unfolds, confirming the most feared scenario, Western sanctions will probably result in Russia being either unable or unwilling to sell its commodities to Europe and other Western allies, meaning the ongoing oil supply shortages are likely to increase, and further price rises expected.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
Shares continued to tumble globally on Thursday, with all European sectors down as investors fled riskier assets amid worsening military conflict in Ukraine. Fear and panic have been some of the key words to describe stock markets between Wednesday and Thursday after President Putin ordered military actions towards several targets on Ukrainian ground. It is now harder and harder for investors to predict where markets are going to go next as many expects the US and its allies to proceed with strong retaliation measures in the shape of deeper economic sanctions. Treasuries, oil markets and precious metals are unsurprisingly among the top performers today despite a slight attempt from most benchmarks to pare some of yesterday’s losses with bullish price action since today’s market open. The situation could hardly be worse for equity investors as the uncertainty continues grow with still no end in sight.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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