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Stock pare losses, bitcoin breakout

US stocks clawed back losses as investors prepared for a massive economic downfall for Russia now that the Western nations are intensifying sanctions. Wall Street finished in the red as Russia’s financial meltdown led to some contagion worries and as surging commodity prices will continue to fuel inflationary pressures that will lead to growth concerns later this year.  It is nearly impossible to be aggressively bullish given the geopolitical uncertainties and continued upward pressures with inflation.

All eyes remain on the war in Ukraine and every move Russia makes.  The Russian Central Bank (CBR) decided that the Moscow stock exchange would not resume stock trading tomorrow. Intensifying sanctions will likely be debilitating for Russia’s economy and banning transactions with the Russian central bank, foreign ministry and sovereign wealth fund is just the start of the West’s hardline.

FX

Russia is trying to prevent the rouble from another plunge.  The rouble plunged when trading started this week as the latest round of sanctions were much more hard-hitting than the first ones.  It is hard to get out of a rouble position after President Putin’s ban on Russian residents from transferring FX abroad and the US banning transactions with the Russian central bank. The rouble will remain a rollercoaster ride, but the risks are elevated that Russia’s currency could see further pain if FX markets want to be against the Russian central bank.

Even the Swiss have abandoned their traditional neutral stance and will abide by the Russian sanctions. Crude prices are consolidating just below the USD 100 level, but once we are beyond the OPEC+ meeting and have a better handle of Iran nuclear deal talks, bullish momentum should return.

Cryptos rally on SWIFT sanctions

Western allies are delivering harsher sanctions and restrictions on Russian banks and that is bolstering the argument for blockchain products that will compete with the SWIFT network. Bitcoin and all the top altcoins are rallying today as investors realize the likelihood of massive investments into DeFi following the latest round of Russian sanctions.

The White House and Treasury are also looking to make it harder for Russians to use crypto to get their money out of Russia.  The fact is that some Russians have already done that and now they will be stuck hodling until sanctions are removed, because they don’t want to risk getting caught and losing their entire crypto investment.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya