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Russia invades eastern Ukraine; huge fines for fx 'cartell'; Aussie retailers face tough Xmas; IEA warns oil investment could fall; NZ$1 = US$0.789, TWI = 78.1

Russia invades eastern Ukraine; huge fines for fx 'cartell'; Aussie retailers face tough Xmas; IEA warns oil investment could fall; NZ$1 = US$0.789, TWI = 78.1

Here's my summary of the key news overnight with news there are headlines over the Russian invasion of eastern Ukraine and that is seriously unsettling global financial markets, although may are still trying to work out the severity of the incursion.

Nato said that Russian forces have invaded, albeit somewhat anonymously. The UN Security Council is in an emergency session. Risk aversion is high on the agenda now, especially in Europe. The NZD has risen sharply.

Overnight, it was announced that American, British and Swiss regulators have fined some of the world’s biggest banks a combined US$4.3 bln for a conspiracy to manipulate currency markets. The fines come as regulators are increasingly targeting a business culture in the financial industry that they say encourages improper conduct by its employees.

Traders worked together to 'whack' the market, called themselves a 'cartell' and congratulated each other for a job well done, according to transcripts released by the regulators today.

These banks  - UBS, HSBC, RBS, JPMorgan Chase, Bank of America and Citigroup - could still face criminal charges in the matter. Barclays is still under investigation.

In Australia, consumer confidence has improved marginally in November, but has nevertheless clocked up the longest bout of pessimism since the global financial crisis, the latest Westpac MI survey shows. They also said the prospects for Aussie retailers this Christmas were "disturbing", with 38% of respondents saying they would spend less this holiday season. 

In New York, UST 10yr bond yields fell marginally and are now at 2.32%.

The oil price slipped slightly again today although it is still at US$77/barrel with the Brent price at US$81/barrel, a four year low. These low prices will have investment consequences.  Investment in US shale oilfields will fall by 10% next year – and result in a decline in production – if the oil price continues to hover around US$80 a barrel, the IEA has warned overnight.

The gold price is also basically unchanged at US$1,161/oz. It was announced that the traditional London gold fix will end at the end of this year to be replaced by electronic trading and run by an American company that owns the New York Stock Exchange. This follows the closing of silver trading in London, to be handled in future by a Chicago company.

The NZ dollar has risen quite noticeably overnight and against all-comers and is now at 78.9 USc, at 90.4 AUc, and the TWI at 78.1. Against the yen, the gains are even more and we are over 91.

If you want to catch up with all the changes yesterday we have an update here.

The easiest place to stay up with today's event risk is by following our Economic Calendar here »

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14 Comments

revenue seeking by regulators, nothing more

And risk aversion would mean the USD would go up, not down (as the positions were closed in anticipation)

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Invade ?  Really.  I would suggest waryness about use of that term.   What I see is The West trying to rekindle the cold war and reviving the bogey of the Russian Bear.   In what is better seen as yet another of those insolvable nasty ethnic brushwars of Europe.

Maybe we should thank the Russians for their work in stablising some of the mess made by the Ukranine crazys.

Billions of fines ?   Hopefully this is in real cash.  But maybe it is more of a regulators press release.   The thing that would scare these traders and companies is the constables leading them from their offices in handcuffs.  But that seems to be a 'maybe in the future'.    In other words, maybe another press release, then quietly forgotten later.   

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Re currency traders and their "sport' at countries currencies expense,am reminded of the games played with our currency and economy by the same type of people in the 90`s. Isn`t our present PM a member of this particular club of people who make money by gambling with other people/countries lives?

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Why the heck would Russia invade Ukraine right at this point in time?

Putin is in Brisbane attending the G20 summit !!

 

The convoy of tanks could be pro-Russian separatist rebels.....BBC photo shows the tanks as being unidentified.

http://www.bbc.com/news/world-europe-30025138

 

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Russian Invasion?...is there any reliable information of this? There's been a lot of parroting of innuendo and conjecture to bang the drums of war but little substance by the media so far.

As notaneconomist points out from the BBC article, the tanks are unidentified and there is no verification of the location in the photo. All sides use Russian military hardware and a lot has been captured from the Ukrainian Army when they were routed in the cauldrons pre the ceasefire and forced to abandon their equipment.

 

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Putin's whereabouts is largely irrelevant at the moment as his army can act without his direct supervision. He is trying to recreate the Soviet Union, and considering the chaos in Russia since the fall of the wall, many of the older population actually support him for what they percieve as a strong leader.  

The West do not want nor need to recreate the cold war as there are too many other places in the world with brush fire type events that need attention, and they cannot afford the cost. Russia has clearly been involved in the Ukraine since the beginning in supporting ethinic russians.

This was an outcome of Lenin and Stalins acts of forcibly relocating Russians to the Soviet states to anable "Mother Russia" to maintain a presence and ties to them, and effect some level of control.

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Re Russia :- PUTIN is the modern day Machiavelli , he deals with things without any emotion , cunningly and duplicitly

Critical journalists are killed or poisoned , opponents jailed , threats to his grip on power are dealt with unemotionally , elections are manipulated .

The shooting down of MH 17  was just a brief setback for his grand plan , he was, and remained, totally unemotional .

His ruthlessness also means no one will confront him and his cunning means no one will trust him

He would not have hesitated to send tanks in to the Ukraine yesterday  , and his sly little smile would not even flinch at the  thought of the possible consequences

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As Boatman knows, Putins troops roast Belgian babies on the points of bayonets.  Oh hang on - wait - sorry -  that propaganda file was for the wrong war and 100 years out of date 

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The Republicans are taking charge of America and are more likely to be keen to confront Russia.

Maybe Putin knows this and is digging in ready. That means he is getting ready for them and is unlikely to back down to the Republicans threats.

 

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Boatman, you obviously have a talent for dramatic characterisation and hyperbole. 

Murray86: Gallup showed the approval rating of Putin was 83% in June 2014....and up to 87% recently. Russia must have a lot of old people if your assertion is to be believed.

Think about it...you don't invade a country with tanks, especially if you're Russia. You use air power then you bring in ground forces.

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You should have seen his posts around NZ election time if you wanted to see hyperbole and dross! The partial reporting by western media through the Ukraine crisis has been appalling.

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I am not surprised at the Gallup poll .

Putin IS popular with ordinary Russians  because he is seen as tough and standing up to so called " Western Hegemony ".

Lets not forget that although about 55 million Germans LOVED Hilter at one stage  it did not make him a nice bloke or someone to trust

Russians have gone from a super-power to almost bankrupt ( the defaulted on their nation debt a few years ago)

They have lost about 1/3 of their population to new states after the fall of communism .

Minorities and Muslims are a real problem demanding all maner of things

Putin is the tough bloke who is seen as making Russia strong again

  

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Hyperbole is never meant to be taken literally .

Dross.......... well thats a bit of an exageration .

It turns out I was right anyway.

Kiwis are not stupid , and roundly rejected the Dirty and Desperate Campaign run by that  hapless gang of 5  :-  GreenLabourManaFirstinternet  AKA   the  " 5 new Tax "  losers.

Kiwis went to the polls and  re-elected John Key with the biggest majority in living memory .

Key has done an exceptional job during the GFC , and NZ is flying with 4% growth , the lowest unemployment ever , and he deserves to  win a Fourth term , mark my words

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