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Yen rises as Russia launches invasion

Hopes that diplomatic moves could avert a Russian invasion of Ukraine were shattered early Thursday, as Russia launched a full-scale attack. The move was not all that surprising, given the massive Russian buildup on the border with Ukraine during the past few weeks. Still, the fighting in the heart of Europe has weighed heavily on the financial markets, as risk appetite has fallen sharply. The safe-haven Japanese yen has gained ground and is trading at 3-week highs.

Western leaders have strongly condemned the Russian military operation, with NATO’s secretary-general calling it ‘a brutal act of war’. There will clearly be more sanctions headed Moscow’s way, but it’s doubtful that this will dissuade Russian President Putin from his aim to force Ukraine back into the Russian orbit. Western Europe is dependent on Russian natural gas and with the US showing no appetite for military intervention, things are looking extremely bleak for pro-Western Ukrainian President Zelensky.

Japan’s CPI expected to rise

On the economic calendar, Japan releases Tokyo Core CPI for February later today. CPI is expected to rise to 0.4%, up from 0.2% in January. Earlier in the week, BoJ Core CPI, the central bank’s preferred inflation gauge, rose 0.8%, lower than the 0.9% gain beforehand. Japan’s inflation has been moving higher, although nowhere near the clip we’ve seen in the US and the UK. Still, with the Russian invasion in Ukraine likely to push energy prices even higher, inflation in Japan should continue on an upswing.

Brent crude pushed above USD 100 for the first time since 2014, as the Ukraine conflict threatens to disrupt oil deliveries from Russia, a major producer. The timing couldn’t be worse for the central banks of the major economies, which are struggling to contain red-hot inflation. The Fed is still expected to hike rates in March, but it may have to put a pause on additional hikes if economic conditions deteriorate.


USD/JPY Technical


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Kenny Fisher

Kenny Fisher [5]

Market Analyst at OANDA [6]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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