Safe Haven Greenback
The second week of Vladimir Putin’s drive into the Ukraine region has revealed the resilient strength of the safe haven Greenback. Meanwhile, we have seen the Euro-related currencies like the EUR, CHF, GBP, and surprisingly, the JPY get hammered. This is because large institutional investors and banking funds have switched their traditional rock-solid investments into the safe haven offered by the US Greenback.
Dow Jones
The DJDI (Dow Jones Dollar Index) has moved significantly towards the Greenback day after day. Typically, the index rises between 5- 15 points on an average day under normal circumstances. However, lately, the index has experienced substantial moves. As of this writing, at market close on Friday, March 11th, the US Dollar index has risen by over 55 points in the last 24 hrs.
This increase is not a one-off occurrence. It’s been like this almost day after day, indicating that significant amounts have moved to the Greenback. It’s not a drizzle but a rainstorm of movement into the USD. The Stock Exchange sells off day after day, showing us that the sentiment is toward a strong US Dollar across the board. As a result, the surplus cash has to move into something – the safe haven greenback.
It’s Not Rocket Science – It’s Vladimir Putin!
The entire world has almost resigned itself to the fact that the Russian invasion of Ukraine will only end with one result – the total capitulation of this sovereign country.
Anyone who thinks Putin is concerned with threats or has any intention of packing up and going home – is dreaming. It’s looking to be more and more like a Scorched Earth policy by the Russian invaders with Putin in the driver’s seat. It’s finally sinking into leaders worldwide– the mission is to take over the country and install Putin’s hand-selected leaders. A lot of hot air is coming out of NATO and the USA leadership, but that’s about it – hot air!
He’s not stopping, and the only negotiations are in his interests. The USA has no appetite to take this on, and NATO is scared to poke the bear. The sanctions will hurt him in the short term, but it’s naïve to believe this is a big shock to Putin. He has prepared for this months in advance. Regardless, at least a dozen countries will continue supporting Russia’s oil and gas. His biggest ally, China, will not abandon him. They all talk a big game but seriously, do you think Putin is worried? I don’t think so.
Market volatility Spikes
Market volatility spikes prove the world wants to believe in peace.
Our ForexSignal clients Friday experienced this sentiment first hand last Friday. Our short EUR/USD sell signal sent to subscribers late into the Asian session was heading solidly towards all targets and beyond. It was announced midway into the Euro session that there was a hint of talks and a possible reversal of Putin’s sentiment. The Euro immediately spiked close to 100 Pips off its low, activating our Stop Loss.
Less than an hour after the false news, the Eur sell was speeding on its way to reversing 100 pips towards the dungeon, testing the 1.0900 level not seen since almost a year ago. The bullish stock market futures market imploded to reverse all earlier gains.
Some Resilience in the Commodity Pairs
As the price of oil and commodities continues to skyrocket, spooked by supply shortages, we have seen some strength in the AUD, NZD, and CAD as well. However, suppose the USD index continues its rapid movement upwards. In that case, this will eventually spill over to the commodity pairs capitulating towards the USD.
A Big Week Ahead for Financial Markets
As we head into the next week, starting March 13th, I believe the sell-off worldwide will continue, or they will come to terms with it and look to resume business as usual. Markets hate uncertainty; we face a situation we have not seen in over 70 years. Time will tell, and the USD Greenback will remain the Safe Haven of choice. Certainly for now, anyway.
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