September 21, 2022
18:09
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Military mobilization in Russia briefly pushed up oil and gas prices. The euro came under severe pressure as investors faced both an escalation of the war and a tightened interest rate policy.
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Vladimir Putin’s “whatever it takes” is not what the markets have been waiting for. The Russian president announced a partial call on Wednesday of military reservists, which is seen as a possible escalation in the war against Ukraine.
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The effect of that language of war was temporarily felt on the commodity and foreign exchange markets. The price of European Brent oil peaked at $ 93.5, up 3%. After that, however, the price of oil dropped completely again, towards $ 90. The price of gas once again exceeded € 200 per megawatt hour, but even here the increase did not last. The price of gas eventually closed even 5% lower at 182 euros.
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We have seen a lasting impact in other commodities. The future of wheat, for example, rose 3.5 percent and eventually closed up 1 percent. A grain supply corridor to the Black Sea could be threatened.
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Gold prices rose nearly 1% during the speech. At the end of the day, it was still up 0.1% to $ 1,666 an ounce, a level considered to be an important level of technical support.
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The euro took a dip and dipped deeper below par with the dollar. Surprisingly, the euro continued to fall throughout the day. One euro traded 0.9 percent down to $ 0.987. This is the lowest level in the last 20 years. The European economy is one of the main victims of the war in Ukraine and is therefore vulnerable to escalation. The pound also suffered and is now trading at around its 37-year low against the dollar.
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“The news from Russia raises uncertainties and this will mainly weigh on the euro and the currencies of Eastern European countries,” says Jane Foley, a currency specialist at Rabobank. “It will only add to the dollar’s status as the ultimate safe haven.”
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This will only contribute to the dollar’s status as a safe haven.