Risk Aversion Seen on ThursdayGlobal markets are in heavy risk-off mode today in response to news of Russia invading Ukraine. News broke in the early hours of the morning that Russia had launched an attack on several front, firing missiles, rolling troops in and deploying troops by air. There have been reports of mass casualties on both fronts as the Ukrainian military attempts to defend the nation. Fears of an invasion have been building for weeks and, despite efforts to establish a diplomatic solution to the issue, it seems that full-scale conflict now looks likely.Russian IntentionsExplaining the attack, Russia president Putin outlined his aims to “demilitarise” and “de-nazify” Ukraine, but not to occupy the country. However, many political leaders in the West worry that Putin’s aims are much darker with fears that Ukraine will be occupied, serving then as a base for expanding the occupation into other countries.Global Response The initial response from the global community has been one of widespread condemnation with many countries moving to apply economic sanctions against Russia. The Ukrainian PM Zolensky has called on his citizens to either fight or remain in their homes and has called on the global community for greater support. While the prospect of any military involvement from the West remains slim, there are fears that if the situation escalates further, that will be an inevitable conclusion.Market ReactionIn terms of market response, we’re seeing equities, commodities and higher-yielding currencies tanking today. Meanwhile, safe haven’s such as USD and JPY, along with gold, are soaring amidst a broad flight to safety. Cryptocurrencies have come under heavy selling pressure also while the Russia Ruble has fallen to record lows against USD and EUR. Oil prices have soared to their highest levels since early 2014 at around $100 per barrel.OutlookLooking ahead, the situation is incredibly precarious and markets remain vulnerable to further downside shocks as headlines come in. Putin has warned the West, in a televised press conference, that “anyone who would consider interfering from the outside – if you do, you will face consequences greater than any you have faced in history.”Technical ViewsGoldThe rally in gold prices today has seen the market blowing through the 1919.92 level resistance the bull channel top, and also the 1958.82 level resistance. With both MACD and RSI firmly bullish here, the focus is on a test of the 1980.66 level next.
Source: Tickmill