With Italy falling back into a recession and the ‘economical war’ that seems to be unfolding between Russia and the West, there may be some very good trading opportunities on the Euro currency pairs and the European equity markets.
The Eurozone and the US placed sanctions on Russia over its position in the Ukraine crisis, some of the targets of the sanctions are:
· Rosneft – Russia’s largest oil producer.
· Kalashnikov – Russia’s largest arms manufacturer.
· Novatek – Russia’s largest natural gas producer.
· Gazprombank – Russia’s largest bank.
These are all important elements to Russia’s economy and so Russia retaliated by imposing their own set of sanctions on the West which included the ban on fruit, dairy, vegetables, fish and meat products.
Theses sanctions imposed by Russia could drive inflation
lower in the Eurozone, prompting fears of possible deflation.
The sanctions will hit European farmers hardest, after the US, Russia is the next largest importer of agricultural goods from Europe, with an estimated value of £9.44bn. Russians may face an increase in food prices as there will be a decrease in supply whereas Europe may experience a decrease in food prices (a welcomed thought for the average consumer), Russia will have to find other sources perhaps South America to make up for the shortage.
Both the West are playing hardball with both parties refusing to back down and placing an economic strain on each other, who will back down first is anyone’s guess.
So what does this mean for us traders? Well, we should be looking at European markets keenly, with the Italian economy falling into recession and these latest sanctions by Russia we might be hearing more bad news from that region, and we may well be presented with good trading opportunities. Look out for news reports concerning Germany they are one of the largest economies in the EU and relied heavily on Russian oil and gas for their energy. So do your research and good luck.