The ongoing geopolitical tensions around Ukraine is a perfect proof on how political stability influences financial market. At the start of the conflict, it led to investors' flight to safe haven instruments, that is Yen, Swissy, Gold, and Greenback. CNN and New York Times (4/3) also reported that stock exchanges around the world tumbled, and energy prices in commodity market increases. It is a measure on how influential this issue is among investors.

The ongoing geopolitical tensions around Ukraine is a perfect proof on how political stability influences financial market. At the start of the conflict, it led to investors' flight to safe haven instruments, that is Yen, Swissy, and Gold. CNN and New York Times (4/3) also reported that stock exchanges around the world tumbled, and energy prices in commodity market increases. It is a measure on how influential this issue is among investors.

It's Not Over Yet
However, early yesterday, prices instantly revert back after some obscure tweets mentioned that Russian President Vladimir Putin withdrew Russian troops from Crimea. The news later was clarified, Putin only took back the troops that has been training near Ukrainian borders, while in Crimea itself still present around 16.000 (according to Ukrainian officials). Much later, the President spoke in press conference that for the time being, there's no need for Russia to use military force in Ukraine yet, although they reserved the rights to use it. Stock markets steadied, and forex traders focus back to various schedules in fundamental calendar.

Is that it?

Of course not. For one thing, Putin is not someone who would turn back on his decision easily. For another, Ukraine has been and is an important player in European continent.
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Historically, it is the hub between Europe and Russia, and Russia to Mediterannean Sea. In Crimean War (1853-1856), France, UK, and Sardinia (now Italy) even agreed to join forces with Ottoman Empire in order to prevent Russia from seizing influence in the region. That war ended in losses for Russia, but they managed to control it during USSR era. Geographically and economically, Ukraine is extremely important for the country.

Europe's Dilemma
Ukraine has been blessed with abundant natural resources, from agriculture to energy. It is one of the world's biggest producer of Wheat; the reason why soon after the conflict erupted, Wheat prices surged 5% (3/3). Besides, Russia, Ukraine, and other countries in its vicinity contained more than a quarter of the world's gas reserves. Europe energy supply relies heavily to gas distribution from the region. As the result, Russia has high bargaining position against European Union with its power to cut supply. Worries over gas supply cut is what propelled oil and gas prices jump on Monday. In US commodities exchange, Gas prices upped 2% and Brent Crude Oil rose even more than that.
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In the circumstances, it is a sure thing that Euro suffered pressures everywhere. Russian Ruble have tumbled much earlier, and investors are running as far from Russia as possible. Some analyst predicted Russiea could be plunged into recession if sanctions fall. In European side, trade relationships with Russia made it difficult for Europe to decide on any economic sanction. Whatever the sanction is, Europe may be as badly influenced as Russia. On the other hand, letting Russia do whatever they want will not look good on their reputation either. European leaders must have felt better after Putin's statement.

Still, the crisis is a wild card in the financial market. For now, the market is in a waiting period. Waiting for whichever side will fire the first bullet in Ukraine. Waiting for further signals from Kremlin. Waiting for how long the cooling tensions will go on. We can rule out a World War Three Between Russia vs Europe-US and a major economic sanction because Europe won't survive them well. Other options though, are still open, such as if the world will let Ukraine to fend for themselves.

In the meantime, market players are eyeing the safe havens as ports in the storm. As long as the storm lasted, the ports are full of ships, but as soon as the storm went, the ships sails again. Be warned of high volatility trading, and don't forget to prepare a solid risk and money management. Market movements at the beginning of this week may be the result of panic, but it is clear that the resolution of Ukrainian conflict will let people breath more easily.

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