Risk trades look less favorable than yesterday, with the sentiment driven by the continuing Russia-Ukraine tensions. Investors stay alert as the second round of Russia-Ukraine talks will reportedly take place later today.
After positive open, European equity markets gave up early gains to turn red on the session, with US stock index futures creeping down 0.2-0.5% after yesterday’s gains witnessed due to a less hawkish tone from the Fed's Powell. Adding to investor concerns, Putin told Macron that the goal of Russia's operation in Ukraine would be achieved in any case.
Meanwhile, oil prices came off their earlier highs registered just below the $120 per barrel figure for the first time since May 2012. Brent is still up on the day, holding around the $117 figure. New Western sanctions target Russia’s oil refining sector, thus raising global supply worries. Of note, even the indirect impact of sanctions could result in a 1 million BPD plunge in the Russian oil exports, which is a significant figure for the global market.
After the local downside correction, Brent crude will likely resume the ascent to fresh ten-year highs as tensions surrounding Ukraine will likely persist at least in the near term. Elsewhere, the Russian ruble hit fresh record lows on Wednesday before steadying somehow today due to new supportive measures from the authorities. USDRUB eased from peaks around 117.00 to settle below the 100.00 figure in recent trading.
The Russian central bank imposed a 30% commission on foreign currency purchases by individuals on currency exchanges. However, it looks like the measure will hardly be able to hold the slide in the national currency substantially, especially as the US dollar itself keeps appreciating globally. The USD index is holding slightly off mid-2020 highs seen on Wednesday below the 98.00 figure.
The greenback stays supported by its safe-haven status in the global geopolitical turmoil. The index now trades around 97.65 as markets are in so-called wait-and-see mode ahead of the next round of talks that will set the further tone for investors. It looks like the buck could challenge the 98.00 barrier in the near term as risk aversion could reemerge at any point.