The mood is worsening as commodity currencies fall further


The weekend hasn’t brought any kind of change in tone.

The US said it was considering sending troops to Eastern Europe as the tensions continue to rise. The State Dept also pulled some staff and families from Ukraine’s embassy.

Russia, for its part, denounced western “hysteria” but troop numbers on Ukraine’s border continue to rise.

The ruble has been beaten up today, along with Russian stocks, which are down 6%. I highlighted asymmetrical opportunity in selling the Russian currency on Friday. USD/RUB has risen to 78.61 from 77.00 on Friday however in the past hour, the Russian central bank has moved to support the currency.

I think the broader market is now getting a taste of war in Ukraine. For me, this is a really tough trade. I think the inclination for most people will simply be to take down risk. There’s a compelling argument that something like oil should rise (and certainly wheat) but when bullets start flying, a world of risks arise and sometimes heading to the metaphorical bomb shelter of ‘cash’ is the best defense until the battlelines are clear. We’re seeing some of that at the moment with crude down $1, giving back its earlier gains.

Commodity currencies are at the lows with AUD/USD down 71 pips to 0.7112.


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