Ukraine Holding Off Russian Attack
In terms of the market's main geo-political focus right now, the Russian invasion of Ukraine, we have seen plenty of developments over the weekend which are influencing price action on Monday. The bottom line is that the Ukrainian military is so far holding off against the Russian invasion with the capital Kyviv remaining under domestic control despite nights of heavy attacks by Russian troops. Ukrainian and Russian officials are now meeting in Belarus today for the first official peace-talks. While little is held in terms of hopes the meeting will end the conflict, it might at least provide a stepping stone in that direction.
Russia Kicked Out of SWIFT
Alongside Ukrainian resistance over the weekend, we have seen a sharp uptick in sanctions against Russia with the EU and US finally agreeing to exclude Russia from the SWIFT payments system. We have also seen unprecedented moves from Germany which will send weapons to Ukraine as well as the EU confirming that it will arrange for the purchases and delivery of arms to Ukraine. The EU has also closed its airspace to Russian airlines and any Russian own, Russian controlled aircraft, putting further pressure on the Kremlin.
Fears of Russian Escalation
While the Ukrainian military defence is holding up for now, there are fears of what is to come. Reports over the weekend of a much larger column of troops headed towards Kyiv, as well as sightings of specialist weaponry being moved into position, is raising fears that Russia is going to escalate the violence. In a statement over the weekend, Putin also announced that he is putting the country’s nuclear deterrence unit on high alert in response to what he claims is aggression from NATO and the West.
Belarus to Join Russian Attack
There have been further worrying developments over the weekend with Belarus’ leader Lukaschenko announcing that Belarus will join the Russian attack on Ukraine. Additionally, the country passed a referendum revoking its nuclear-neutral status, allowing for Russian nuclear arms to be brought into the country.
Ruble Collapses
The market reaction to the weekend’s developments has been most pronounced in the Ruble which fell by over 25% against USD. USDRUB is now over 40% higher on the year. With Russia kicked out of the SWIFT payments system, foreign banks have been unable to purchase Rubles. The Russian central bank announced an 11.5% rate hike this morning in a bid to counter the moves which are stoking fears of runaway inflation. With headline interest rates at 20%, the Russian government has reportedly ordered companies to sell 80% of their foreign FX reserves in a bid to prop up the Ruble.
Technical Views
USDRUB
Looking at the market on the weekly scale, (easier given the moves), we can see that price has broken firmly above the prior 83.03 highs. With both MACD and RSI bullish here, the focus is on a continuation higher within the bull channel. The next topside marker to watch will be a test of the bull channel top. To the downside, 83.03 and 80.17 are the key supports, with the bull channel low coming in just beneath.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.