The dollar index, which measures the performance of the greenback versus a basket of other major currencies, has so far this week gained more than 1%, despite the retreat from the 19-month maximums recorded on Thursday. The unfolding of events in Ukraine, where Russian forces are currently closing on Kiev, is causing concern among investors. The geopolitical and economic risks triggered by Moscow’s attack are generating high levels of uncertainty and driving a flight to safety in the financial markets, with the US dollar, alongside the yen and the Swiss franc, fulfilling their roles of safe-havens and gaining ground on riskier currencies, in which we must, in this case, include the euro.
Brent oil prices are trading above 100 dollars a barrel for the second consecutive day, despite having retraced some of the gains recorded during the previous session and earlier on Friday, too. The Russian invasion of Ukraine is behind the latest escalation in prices, as the expected repercussions of the conflict over global oil supply are likely to exacerbate the ongoing supply shortages and drive further price increases. Even if the military situation on the ground calms down after the initial attack, the dispute between Russia and Western powers seems poised to last for a prolonged period of time, with Russian oil exports likely to suffer. In such a scenario, the price of the barrel is likely to remain elevated and to consistently trade above the 100 dollars mark for the foreseeable future.
European stocks opened mostly lower, despite attempts from Athens, Copenhagen, and London to offset losses registered in Frankfurt, Paris, and Milan amid lingering market uncertainty. The “risk-off” trading mood prevails for the last trading session of the week, as investor sentiment remains weighed down after President Biden announced further economic sanctions towards Russia, following yesterday’s attack. Even if some investors still bet on the fact the conflict will come to an end with some sort of economic/military agreement between Russia and Nato countries, many are hesitant to buy the current dips on stocks as no significant breakthrough in diplomatic talks have yet been registered, meaning the market could still fall further. Meanwhile, investors wonder how central banks, and particularly the Federal Reserve, will react to the current events with monetary policies. Traders are likely to pay close attention to today’s Federal Monetary Policy report, alongside US Core Durable Goods orders for January in order to get more clues on where the Fed might go next.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
