It’s been going on on the ground for quite some time, but now Ukraine cannot ignore it and says that Russia has invaded. Ukraine president Petro Poroshenko announced it, cancelled a trip to Turkey and called for an urgent meeting of the security council.
Safe haven currencies, the Swiss franc and the Japanese yen are in demand. The euro-zone, which already pays an economic price for the tensions around Ukraine, is falling.
Gradual invasion
Also safe haven bonds are in demand, with German 10 year bond yields falling below 0.90%, continuing the previous trend.
On one occasion, an incursion of Russian soldiers into Ukraine was “a mistake”. In another occasion, those soldiers were “on vacation” and the US has called it an “incursion” so far, as if it were a field trip.
Beforehand it seemed that Russia is Ukraine. This is already more than distant help but rather an active invasion.
But now, as the evidence of an invasion in a third front that was quiet beforehand mounts, Ukraine said it out in the open: we have been invaded.
Safe haven flows
EUR/USD loses previous gains after almost closing the gap. EUR/CHF is down under 1.2060 to a new low. USD/JPY that was ignoring geopolitics so far is also down to 103.60.
EUR/CHF already dropped earlier in the week and it is getting closer to the 1.20 floor. There are reports that the Swiss National Bank is already active in the markets, even though it seems unlikely that the markets will attempt to break the SNB.
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