Daily Market Commentary 8th March 2022

Markets continued to suffer the fall-out from the Ukraine invasion. The ramifications are far reaching and extremely damaging to Europe, the USA and the world. The heavy sanctions imposed will ensure damage to the Russian economy, but will devastate Europe and also hurt the US economy and perhaps the mighty US Dollar? Russia is a massive exporter of energy and agriculture to Europe and this manipulation, will only exaggerate the energy crises in Europe, with prices spiralling out of control. Oil hit US$130/barrel and gas has also gone through the roof. The flight to the safety of the US Dollar is killing the EUR which collapsed to trade 1.0810, while the GBP crashed to 1.3100.

The boost to commodity prices has protected the associated currencies, but even they were not immune, as the reserve currency surged upwards. The AUD fell back to 0.7310, while the NZD dropped to 0.6830, after previously breaking above 0.6900. This crises in the Ukraine has the potential to throw the world economy into a recession, with unintended consequences, severe.

The sooner the invasion is over and a political agreement is reached, the better.