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Analysis

Wagner mutiny ends but questions remain

BY Janne Muta

|June 26, 2023

The return of mercenaries from the Wagner group to their bases signalled the end of the armed mutiny in Russia. What at first seemed like a significant development that could significantly degrade Russia’s ability to continue the war in Ukraine and quite possibly impact the oil market fizzled out rather quickly. USOIL traded a little higher as the futures markets opened after the weekend, but the market reaction remained subdued.

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The question remains, however, whether Putin’s strong grip on power in Russia might actually be more fragile than believed. The fact that an armed colony of at least 5000 men can march towards Moscow without being challenged or stopped has either revealed massive weaknesses in Moscow authorities' ability to defend the capital or, alternatively, this was a staged performance that provides Putin with a justification for another large-scale mobilization. Time will tell.

According to Reuters, the Russian ruble gapped down to a 15-month low in Moscow. If cracks that have now appeared in Putin’s power structure start to widen, it won't be only the Ruble that sees a substantial increase in volatility. The other markets will not remain unaffected either.

Elsewhere, inflation pressures, weak manufacturing data from Europe and US and potential tightening by central banks continued to keep investors cautious. The US and European equities markets traded lower on Friday. The Indices we follow (DJ, NAS, DAX and FTSE) all closed down for the day. At the same time, stocks globally recorded their largest weekly decline in over three months. US bond markets (and yields) have been moving sideways in range for five weeks now. USD strengthened last week and gold bids remained soft. JPY and AUD remain the weakest of the major dollar counterparts.

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DJ

DJ is trending lower in the 2h chart. The downtrend stays in force below 33 847. Above the level, the market could move to 33 980.

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DAX

DAX is trending lower below 15 915 but it has moved to levels trading reasonably close to a weekly support level (15 624). Friday’s low was only 0.7% away from the weekly support level. Therefore, the targets for possible short trades should be conservative. Above 15 915, the market could move first to 16 000 and then possibly to 16 180.

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Gold

XAUUSD remains bearish below 1937. Above the level, gold could trade to 1950. Below 1937, look for a move to 1887.

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USDJPY

USDJPY is bullish above 142.70 and could trade to 146.20. Below 142.70, look for a move to 142.10.

The Next Main Risk Events

  • CHF SNB Chairman Jordan Speaks
  • EUR ECB President Lagarde Speaks
  • CAD CPI
  • USD Core Durable Goods Orders
  • USD Durable Goods Orders m/m
  • USD CB Consumer Confidence
  • USD New Home Sales
  • USD Richmond Manufacturing Index
  • AUD CPI
  • EUR ECB President Lagarde Speaks
  • GBP BOE Gov Bailey Speaks
  • JPY BOJ Gov Ueda Speaks
  • USD Fed Chair Powell Speaks
  • EUR ECB President Lagarde Speaks

For more information and details see the TIOmarkets economic calendar.


Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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