War Reaches NATO Territory

For the past several hours Przewodow Poland has become the most popular village in the world. Two people died as a result of…Well that’s the thing that isn’t clear yet and that’s why uncertainty is back on the market.

We still don’t have a final conclusion on what actually hit this village. Was it a Russian cruise missile or maybe a Ukrainian anti-aircraft missile or both or none or just their remains. The latest rumors point at anti-aircraft missiles used by Ukrainian Forces. The reason why the incident triggered the markets is that Poland is a NATO member and this could, but of course doesn’t have to, escalate into something bigger.

In my humble opinion, it won’t escalate. The main players on the chess board will treat it like a major incident but it’s still just an incident. Many experts have been predicting that this could happen sooner or later considering how many rockets Russia launched on Ukraine, their lack of accuracy and how they’ve been pounding civilian targets without hesitation.

The market reaction has definitely been negative. The Polish zloty and other emerging market currencies dropped. Indices as well. Initially everybody was afraid of an escalation and we didn’t know anything for sure.

This attack on Polish territory was covered completely by the XI-Biden meeting that happened at the G20 in Bali, which is very unfortunate as the outcome was rather positive. I guess that most experts agree that it went much better than expected and statements from both sides were optimistic.

Wednesday will be super busy, even without the news from Poland and NATO. The morning kicked off with CPI data from UK, which came in hot at 11.1%, beating out expectations of 10.7%. The reaction on the GBP has been mixed. At first, we saw a drop but then a quick recovery, and now, the GBP is trading more or less at the same levels as before the data release.

That isn’t the only inflation data that will be published today. We’ll also get inflation data from Canada, and Retail Sales from US. The beginning of the American session will definitely be something to watch out for!