The U.S. Dollar hit a fresh best level overall since May 2020 following a weekend of concern over the negative effects for the global economy as the Russian invasion of Ukraine causes more turmoil across markets.
Overview
Energy costs, as well as raw materials, continue to climb as sanctions are crippling the regular flow of minerals and essentials, primarily in the greater Eurasian region. European Union leaders remain on high alert and want to isolate Russia as much as possible in order to incentivize them to negotiate some sort of peace or cease-fire. With the Biden administration considering setting a ban on Russian oil imports, speculation is going overboard and prices for everything are rising.On the other hand, the Australian Dollar and New Zealand Dollar are on the rise as commodity-based tender benefits from the chaos. Each is up by over 1.5% today and trading around the best levels since November.Economists are now worried that we will be entering a period of “stagflation,” one in which high inflation is persistent along with low-level economic growth. Let us see what a resolution could do down the line, but pandemic woes during combating it are now exacerbated with armed conflict. As long as inflationary pressure remains, it makes the Fed likely to hike multiple times throughout the year.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro dipped once more into its weakest point in almost two years as Russian aggression has been countered with a ton of economic sanctions. The interdependence built ever since the fall of the Berlin Wall seems to be collapsing quickly in front of our eyes as leaders across the continent continue to passionately denounce the course of action taken by Russia’s Vladimir Putin.
Major stock exchanges in Europe fell more than 20.0% as fears grow that the economy of the EU will go through dire times until new supplies of energy are resolved. Russia provides much o the natural gas and oil needed to keep the lights on in the western part of that hemisphere.
GBP
Sterling is down to its weakest point since November based on the potential for more turbulence, violence, and death emerging from Ukraine. With oil prices at the highest point since September 2008, the British economy is also vulnerable to the energy flows and now it must seek solutions that will not hurt businesses as they try to invest post-pandemic.
A lack of hope at the moment and expectation of escalation following the attack on a nuclear facility makes for a strong-dollar recipe and we may not be out of it with any clarity anytime soon, thus volatility levels will keep things wild.
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