Russia Won't Be Happy – Not At All

It would be extremely irresponsible ( in my eyes ) for Obama and the U.S to actually “attack” Syria here.

We’ve now heard from the Brits who are “officially out” as well Germany will have no part in it. Russia has mobilized a couple of their own “battleships” in the area and have major MAJOR interests in Syria.

Russia is a permanent member of the U.N. Security Council. It has the power to veto Security Council resolutions against the Syrian regime and has done so repeatedly over the past two years. So, if the United States and its allies are relying on a U.N. mandate to greenlight a military strike, they may be waiting a long time.

Syria provides Russia with its only port in the Mediterranean so you can imagine how significant / important Syria is to Russia’s military / naval interests , as well what the port may represent economically. It’s only port!

Russia will not simply stand by and watch such a significant asset go – absolutely not.

So where does that leave Obama? What’s he gonna do? Lob a couple missles in there and “make a statement”?

Complete “middle ages” move.

You’d have to be pretty well prepared and have a mighty big plan to just “go off and decide to launch a couple missles” this time.

I still find it very, very hard to phathom this happening.

Market Implications and Currency Dynamics in Crisis

Safe Haven Flows Dictate Currency Movements

When geopolitical tensions escalate like this, the forex markets become absolutely predictable in their knee-jerk reactions. We’re talking classic safe haven flows here – USD, JPY, and CHF getting bid up while risk currencies like AUD, NZD, and emerging market currencies get absolutely hammered. The thing is, most traders completely miss the bigger picture. Sure, you’ll see initial USD strength as investors flee to safety, but here’s the kicker – if the U.S. actually goes through with military action, that same dollar strength evaporates faster than morning fog. Why? Because suddenly America isn’t the safe haven anymore – it’s the aggressor spending billions on another military campaign it can’t afford.

Look at what happened during previous Middle Eastern conflicts. The dollar initially rallies, then gets crushed as oil prices spike and the reality of war costs hit home. We’re already seeing crude oil futures jumping on supply disruption fears, and that’s with just the threat of action. Imagine what happens if missiles actually start flying. The correlation between oil prices and USD weakness isn’t some academic theory – it’s market reality that’ll steamroll unprepared traders.

European Currency Chaos

The EUR is caught in an absolute no-win situation here. On one hand, you’ve got flight-to-quality flows that should theoretically support the euro as European leaders distance themselves from U.S. military plans. But that’s surface-level thinking. The reality is Europe’s economy is still fragile as hell, and any major geopolitical shock sends the EUR tumbling regardless of political positioning. Germany saying “count us out” might sound politically prudent, but it exposes the fundamental weakness in European unity that currency markets love to exploit.

Here’s what really matters for EUR/USD: if this Syrian situation escalates, we’re looking at potential energy supply disruptions that hit Europe harder than anywhere else. Russia supplies roughly 30% of Europe’s natural gas, and Putin isn’t exactly known for separating business from politics. One “technical maintenance issue” with Russian gas pipelines during a Syria crisis, and the EUR gets obliterated. The ECB knows this, which is why Draghi’s been so careful with his rhetoric lately. They’re walking a tightrope between maintaining credibility and preparing for potential economic warfare.

Commodity Currencies Under Siege

The commodity currencies are where the real carnage happens in scenarios like this. AUD/USD, NZD/USD, CAD/USD – they all get crushed when global risk appetite disappears. But here’s the nuance most traders miss: not all commodity currencies react the same way to Middle Eastern tensions. The CAD actually has some built-in protection because Canada benefits from higher oil prices. When WTI crude spikes on Syria fears, Canadian oil exports become more valuable, providing some support for the loonie.

Australia and New Zealand don’t have that luxury. Their currencies depend on Chinese demand for iron ore, coal, and agricultural products. When global tensions rise, Chinese manufacturing and construction slow down, demand for Aussie and Kiwi exports drops, and those currencies get hammered. It’s a direct line of causation that creates massive shorting opportunities for those paying attention. The RBA and RBNZ can talk tough all they want, but they’re powerless against global macro forces.

The Real Currency War

What we’re really witnessing here isn’t just about Syria – it’s about the fundamental shift in global currency dynamics. Russia’s positioning naval assets in the Mediterranean isn’t just military posturing; it’s economic warfare. Putin knows that controlling Syria means controlling energy routes and maintaining leverage over European energy supplies. That’s currency manipulation on a geopolitical scale.

The RUB has been getting crushed on sanction fears, but if Russia successfully prevents U.S. intervention in Syria, you’ll see a massive reversal. Putin’s betting that Obama blinks first, and if he’s right, the ruble rally will catch everyone off guard. Meanwhile, emerging market currencies from TRY to ZAR are getting absolutely destroyed as investors flee anything remotely risky. This isn’t temporary volatility – this is structural repositioning that’ll define currency relationships for months ahead.