Russia invades Ukraine: beware of a risk off weekly opening

FXStreet (Buenos Aires) - Early Sunday, Russian President Vladimir Putin acted and sent its army to Crimea, after winning his parliament’s approval to do so. The Russian president claims his actions are in order to protect its interests and those of Russian speakers in Ukraine. Crimea is a peninsula of Ukraine located on the northern coast of the Black Sea. Actually, the Autonomous Republic of Crimea is on the eye of the storm ever since the crisis began among the two countries, as is the only part of the country with a Russian ethnic majority that are against the revolution that brought a new government to power last week.

In Ukraine, Prime Minister Arseniy Yatsenyuk declared he is ready to fight back, as in his own words “this is actually the declaration of war to my country”, announcing he will call up all military reservists, put its troops on high alert and appealed for help to NATO, and directly to Britain and the United States, as co-signatories with Moscow to a 1994 accord guaranteeing Ukraine's security.

US President Obama gets involved

US President Barak Obama in the meantime expressed its concern about the situation, stating that Russia had committed a clear violation of Ukrainian sovereignty by sending forces into Crimea and warned of consequences. In fact, the President Obama's National Security Council (NSC) twitter account, @NSCPress even announced “The United States will suspend upcoming participation in preparatory meetings for the G-8” after a series of twits expressing concern, and even announced the US “will stand with the international community in affirming that there will be costs for any military intervention in Ukraine.” Also U.S. Secretary of State John Kerry condemned Russia, adding that G8 countries and other nations were prepared to "to go to the hilt to isolate Russia" if the situation escalates.

Safe havens to gap higher?

According to Valeria Bednarik, FXStreet chief analyst, weekly opening may see several gaps across the board, particularly in yen crosses, due to the safe haven condition of the Japanese currency. As for the greenback, she also believes the currency may see some early strength, albeit she warns about the risk of “buyers waiting on dips in EUR/USD and GBP/USD: and educated guess would be EUR/USD buyers will surge on approaches to 1.3680/1.3710 area, while GBP/USD will find them around 1.6690. Nevertheless, with market closed, seems a bit too risky now to anticipate investor’s reaction to weekend news. Price behavior should be a good guide o whether the gaps can be quickly fulfilled, or if the run to safety will extend over this Monday.”

She adds that gold may also find the strength to advance with the move, warning that a break above recent spot high of $1345 is required to confirm a leg higher.

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