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Geopolitical jitters threaten to come back – Danske Bank

FXStreet (Edinburgh) - According to Flemming Nielsen, Senior Analyst at Danske Bank, the situation in Ukraine-Russia remains fragile.

Key Quotes

“With a renewed increase in tension between Ukraine and Russia geopolitical risks are back on the agenda, albeit the impact on US and Asian stock markets has not been dramatic”.

“With increasing expectation of further easing from ECB as soon as next week, we continue to see substantial downward pressure on interest rates”.

“Yesterday’s Eonia fixing was -0.004% - the first ever negative Eonia fixing. The 10-year German Bund yields also dropped to a new all-time low of just 0.88%”.

“However, with renewed risk aversion in the market, the peripheral spreads widened yesterday”.

“In eastern Ukraine there are increasing signs of a de-facto low-scale Russian invasion”.

“However, there have been no major movements overnight and at the moment it does not look like the purpose of opening a new front on the southern Ukrainian coast is to create a corridor, which would be a major game changer”.

“The main purpose of the increased intervention still appears to be to freeze the situation on the battlefield and force Ukraine to the negotiating table”.

“However, with more signs of Russian intervention, there is increasing risk of another round of trade sanctions”.

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