Tensions elevated yesterday when President Obama held a press conference late yesterday and announced additional sanctions against Russia.
The increase sanctions include additional penalties against Russian energy companies and financial institutions. The sanctions come on the heels of renewed tension between Russia’s involvements in the Ukraine.
Russian leaders reacted strongly to the Western sanctions with Russian Prime Minister Dmitry Medvedev sending warning back stating “reciprocal measures against foreign companies and individuals". The new sanctions to say least has thrown much more fuel on anti-Western feeling in Russia (RSX, quote).
The results can be felt across the board. The USD/RUB pair pushed above the 35 level this morning resulting in the strongest U.S. dollar against the Russia Rubble in 6 weeks. The EUR/RUB also saw significant strength as well. Look for the USD/RUB to test the June 4th high in today’s session.
The Russian ETF RSX is looking to open this morning over 4% ($-1.10) lower this morning and could look to test the June 30 $26 low.
Bottom Line: Caution is the name of the game with Russian names this morning. What the USDRUB as a window into the future.