Volatility engulfs markets as Russia invades Ukraine

Daily Currency Update

Volatility engulfed financial markets through trade on Thursday following Russia’s invasion of Ukraine. Hopes of a diplomatic resolution to escalating tensions vanished after President Putin ordered a “Special Military Operation” to liberate the disputed Eastern region of Donbas. After just a few hours it was clear that Putin’s plan extends much further than simply re-taking disputed territories in Ukraine’s East. Targeted missile strikes hit a number of strategic targets and cities across Ukraine, including Kyiv where Russian troops are reportedly attempting to take control of airports surrounding the city as a base to launch a full scale offensive on the capital and force Ukraine back into Russia’s sphere of influence. The AUD collapsed through 0.72 US cents marking intraday lows below 0.71 as investors chased safe haven assets propping up the USD, JPY and CHF. Having tested supports only marginally above a key technical swing point, the AUD recovered some of the day’s downturn pushing back through 0.71 and 0.7150 to open just short of 0.7175 US cents. Having absorbed the initial risk-off play, commodity currencies found some support as key commodity prices rallied, led by oil and gas on fears war will only exacerbate recent supply side shortages. Our focus will remain on developments in Ukraine as risk sentiment and demand dominate direction.