(OP)inions Volatility times for traders

March 7, 2022 

As another week starts the only certainty for traders is that they‘re in for another volatile stretch, with Russia’s war in Ukraine upending financial markets.

The dollar is in the spotlight, after appetite for havens helped lift a gauge of the currency to its highest since July 2020 on Friday, and with the U.S. Secretary of State saying the Biden administration and its allies are discussing an embargo of Russian oil.

The euro rose as trading opened in Asia, extending a recovery from the lowest level in almost two years. It hit that mark Friday as investors searched for ways to bet against the growing crisis in Europe. The modest gain in the euro in early Monday trading came after a decree allowing Russia and its companies to pay foreign creditors in rubles, potentially staving off defaults while capital controls remain in place.

Resource-linked currencies are set to be in the spotlight as war-related supply concerns boost prices for energy, metals and crops, as will the all-important U.S. bond market. Meanwhile, Chinas yuan could respond to signals that more domestic stimulus is on the cards.

Volatility has soared as investors attempt to digest the severity of the conflict.

A gauge of swings in U.S. Treasuries last week climbed to the highest in almost two years, as 10-year yields dipped below 1.7%, market liquidity thinned, and signs of  stresses popped up in money markets.

OnePro Special Analyst

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