The stock market in the United States has been shaken as traders are wary of potential changes while they monitor the rising tensions between Russia and Ukraine and how the U.S. will respond.
Wall Street's main benchmarks shifted in post-market trading on Monday as investors are weighing the potential aggression of the Russian military. The situation is caused by the prospect of quick monetary tightening by the U.S. federal reserve to respond in assistance of Ukraine.
Global Economy
Recently, fears have grown of Moscow greenlighting a move to invade Ukraine as early as this week. The situation has created a fast track for global markets that are concerned that a conflict between the two nations could exacerbate inflation and result in other economic issues.
In the past few days, geopolitical tensions have risen as U.S. officials warned that a potential war with Russia was completely possible. On Monday, it was also reported that the U.S. government was closing its embassy in Kyiv and ordered the destruction of networking and computer equipment to prevent confidential information from leaking if Russia decides to attack, as per Yahoo Finance.
The rising tensions in Europe have also caused the EUR/USD to hover just above 1.1300 due to concerns regarding the Eurozone's economic vulnerability to a war between Russia and Ukraine. Furthermore, fears have resulted from dovish-leaning remarks from ECB policymakers that weigh on the euro.
Read Also: Vladimir Putin Says Russia Will Do Anything to Protect Itself Against NATO, Ukraine Aggression
Last week, the EUR/USD was sent spiraling down to below 1.1400 after the U.S. press, citing U.S. intelligence, reported that Russia was gearing up to attack Ukraine any day. At about 1.1320, the pair is roughly 1.5% below last week's highs and is almost back in line with its pre-hawkish ECB meeting levels from Feb. 3.
FX Street reported that the break below 1.1400 in EUR/USD last week was a hint that the European Central Bank members made an attempt to cool down excessive hawkish speculation that has already extended to the euro. The bank added that another break below 1.1300 could further generate some momentum in EUR/USD that could cause it to go to the 1.1200-1.250 range.
Russia-Ukraine Tensions
On the other hand, the price of gold nears a three-month peak as demand has increased due to the tension between Russia and Ukraine. As of Monday 12:05 p.m. EDT, spot gold rose 1% to $1,862.58 per ounce, the highest it has been since mid-November. US gold futures were also up by 1.2%, with a price of $1,863.80 per ounce in New York.
Despite U.S. officials warned on Sunday that a Russian attack was imminent in the next few days, Moscow called the fears "hysteria." The Kremlin has repeatedly said that it was not planning to invade Ukraine despite building thousands of troops at the border with its neighbor.
Russian President Vladimir Putin staged televised meetings with his foreign and defense ministers while emphasizing the de-escalation of tensions. The official continued efforts to find a diplomatic resolution to the recent crisis, Mining reported.
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