Ukraine and Russia conflict and impact on monetary policy

Federal Reserve officials are wary of a Russian invasion of Ukraine, though several have said in recent days that geopolitical tensions are unlikely to stop them from withdrawing support for the US economy. The job market is booming and prices are rising fast. This week positive US employment data is expected with a drop of 3.9% from 4% in the previous month.

Central banks are poised to raise interest rates in March. The Russian invasion of Ukraine poses a risk to economic growth, but will likely exacerbate inflation. Stock indices are fading and the prices of key commodities, including oil and gas, have risen sharply and could continue to rise as Russia, a major producer, responds to US and European sanctions.

That makes the invasion a tricky risk for the Fed: For one thing, its fallout is likely to further increase price inflation, already running at its fastest pace in 40 years. On the other hand, it could weigh on growth if share prices continue to fall and nervous consumers in Europe and the United States refrain from spending.

The magnitude of the potential economic hit is far from certain, and for now, central bank officials have signaled that they will remain on course to raise interest rates from near zero in a series of hikes starting next month, a path of policy that will make borrowing money more expensive and cool down the economy.

EURUSD registered 1.1350 at the time of the first attacks. In 24 hours the cross traded at 1.1106. Currently the recovery of the euro is sustained. The EU proposes Angela Merkel as mediator of the conflict. The preference is buyer for next week. Above 1.1290, prices would return to projections within the annual lows of 2022.

GBPUSD remains within projections of yearly lows. The preference is buy over 1.3420 up to 1.3430 and 1.3440.

USDJPY remains unchanged. The preference is sell below 115.50 up to 115.40 and 115.30.

USDCAD remains sell . The current price zone has a high potential buyer, it is possible that the market has priced in the Canadian interest rate hike for next week. Between 1.2670 and 1.2680 it is convenient to wait for buyer positioning. Sell is only proposed below 1.2670.

XAGUSD XAUUSD remain at take profit prices. The preference is sell for next week. In gold we wait for 1875.0 to sell until 1862.0. The 1900.0 levels would remain as highs in the market zone. In silver the preference is sell below 24.20 up to 24.0.

Cryptocurrency market remains in slight recovery. For BTCUSD, 40,000 USD is expected to enter the buyer and it would return to recovery levels prior to the attacks. BTC price targets are between 43,500 and 44,500.