The USD is trading mixed to slightly lower as the Russian invasion of Ukraine and its consequences continue to buffet markets. The risk tone is a little more constructive amid reports that the EU is considering issuing joint debt to fund energy and defense spending; the extraordinary news reflects a clear desire to bolster the bloc against external risks but it has had the effect of supporting peripheral bonds, supporting the EUR and lifting European stocks. US equity futures are modestly positive after yesterday's weak close. Meanwhile, the LME was forced to halt nickel trading after prices rose 250% over two days; nickel surged to $48,000/tonne yesterday and briefly traded above $100,000 today in a massive squeeze on short positions. Trading may remain suspended for some days, according to reports. Russia has threatened to cut natgas supplies in response to sanctions, boosting European prices briefly. Shell said it was withdrawing from Russian oil and gas markets. Crude oil remains firm (up 3% on the session). bonds are broadly lower on inflation worries and EU supply.
President Biden announced on Tuesday that the U.S. will ban the importing of Russian oil, liquefied natural gas and coal, broadening the economic sanctions leveled against Moscow over its war in Ukraine.
The targeting of Russia’s most lucrative industry despite the likelihood of higher gasoline prices comes as bipartisan support in Congress has coalesced behind such restrictions and Europe has begun taking steps to reduce its imports of Russian energy products. The oil ban and other tough sanctions are being imposed by Western powers in the hopes of persuading Russian President Vladimir Putin to halt his all-out attack on the former Soviet republic.
“Russian oil will no longer be accepted at U.S. ports,” Biden said in a speech from the White House. “We will not be part of subsidizing Putin’s war.”
“Russia may continue to grind out its advance at a horrible price, but this much is already clear: Ukraine will never be a victory for Putin. Putin may be able to take a city. But he’ll never be able to hold the country,” Biden said, adding that the ban would target “the main artery of Russia’s economy.”
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