The market doesn’t like uncertainty. The probabilities of a USA 50bps rate hike are currently less than an assault on the Eastern flank of Ukraine. But the only person who really knows whether that is going to happen is Vladimir Putin. The West could appease Russia by not pursuing NATO expansion, but that is unlikely to happen. Where there is war there will be a flight of money out of the danger zone, heading to safety. The euro and Ruble are the two currencies closest to potential action. The US dollar may have the most to gain if NATO were to weaken Russia defensively but also if global sanctions are imposed on Russia.
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