US/Russian Tensions Rising

Global geo-political tensions are on the rise again this week with news that President Biden has approved fresh sanctions against Russia over the poisoning of Russian opposition leader Alexei Navalny. The measures, which come as the result of a US intelligence assessment, have been applied against seven government officials and 13 Russian corporates under the terms set out by the 1991 Chemical and Biological Weapons Act. Launched in a co-ordinated move along with fresh EU measures, the actions also represent an extension of those already in place against some Russian officials following the attack on Sergei Skripal and his daughter which took place in 2018 in the UK.

Under the new measures, the figures involved will have any US property, dealings of finances blocked and anyone dealing in transactions with those individuals could also face sanctions. Some of the figures involved are very high ranking such as the director of the FSB as well as two deputy ministers of defence.

Russia Denies Involvement

The Russian administration, including Putin himself, have consistently denied any involvement in the nerve agent attack on Navalny which occurred during a Siberian flight in 2020. The nerve agent used was the same used in the attack on Skripal in the UK in 2018 which a US intelligence assessment has linked back to Moscow and the Russian administration.

Biden Taking Firmer Stance

As with China, Biden has vowed to take a hard stance against Russia. One of his big criticisms of the Trump administration was that it was too soft on Russia. Indeed, there was plenty of speculation regarding links between Putin and Trump. However, following a call with Putin last month, Biden said that the era of the US "rolling over in the face of Russia's aggressive actions, interfering with our elections, cyber-attacks, poisoning citizens are over".

Awaiting Russian Response

While Russia has yet to officially respond to the US sanctions, a member of the country’s foreign ministry office tweeted for the US to “stop playing with fire”. Ahead of the sanctions being announced, Russian Foreign Mnister Sergey Lavrov said that Russia would definitely respond to any sanctions saying that “reciprocity” is one of the key rules of the Russian administration. For now, the market awaits the next step in this situation.

Technical Views

USDRUB

USDRUB has been trading in a bear channel since the failure at November 2020 highs. However, the downtrend has been held up at the 72.66 level support which has proved to be a tough downside barrier for the pair. While the channel remains intact, the bias is towards an eventual break lower targeting the 70.46 level next. Bulls need to break above the 76.13 level to adjust this view.

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