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 NZD tumbled off its post MPS and RBNZ high, giving up 0.6775 and 0.67 to mark intraday lows at 0.6625. Having found support, the NZD managed to erase some of the day’s losses, climbing steadily into this morning’s open where it currently buys 0.6702 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. Markets are likely to continue to ignore domestic drivers as all attentions remain with developments in Eastern Europe.