The US dollar jumped to a new 20-year high on Wednesday after Russian President Vladimir Putin called on 300,000 reservists to bolster his invasion of Ukraine and threatened to use nuclear weapons to protect Russia’s interests. annex parts of occupied territory.
The Dollar Index, which measures the value of the US dollar against six other major currencies, rose nearly 0.6% to 110.87 after the news on Wednesday, its highest level since 2002.
However, European currencies underperformed as the British pound fell a staggering 0.7% against the dollar, falling to its 37-year low.
The euro, which fell below par with the dollar this summer, fell 0.7% to its two-week low.
Safe haven assets also rose following the news, with the Japanese yen rallying 0.3% against the dollar and gold 0.6%.
What to watch out for
The Federal Reserve is expected to announce a sharp rate hike on Wednesday in a bid to contain rising inflation. It is also expected to announce further plans to raise interest rates in the coming months, in line with central banks around the world also fighting rising inflation and the rising cost of living.
Putin announced plans for “partial mobilization” of army reserves in a televised speech Wednesday morning, doubling down on the invasion after weeks of setbacks and successful counter-offensives by Ukrainian forces. It is Russia’s first mobilization effort since World War II and a clear sign from the Kremlin that the invasion is not going according to plan. It follows reports of heavy losses, staggering pullbacks, share of lost territory and serious supply chain problems as global sanctions wreak havoc on Russia’s economy. Putin interpreted the invasion as a battle between Russia and the West and set the stage for the formal annexation of parts of Ukraine. He recognized a series of upcoming referendums in occupied territories to join Russia as legitimate, unlike Kiev and Western allies, who have suggested they will not recognize any vote or annexation that results. Putin reiterated threats that Moscow would defend its interests by any means necessary, including nuclear weapons, stating that he was not bluffing and that Russia has “many weapons” with which to respond to threats.
Putin brings in 300,000 reservists to fight in Ukraine as he supports referendums in occupied Russian territories (TAUT)