Forex Today: Investors seek refuge as Putin announces military mobilization, eyes on Fed

Here is what you need to know on Wednesday, September 21:

Safe haven flows dominate the financial markets early Wednesday after Russian President Vladimir Putin announced partial military mobilization. The US Federal Reserve is widely expected to raise its policy rate by 75 basis points later in the day and investors will scrutinize the updated Summary of Economic Projections. The US economic calendar will feature Existing Home Sales data for August and market participants will keep a close eye on geopolitical developments as well.

Fed September Preview: Terminal rate projection is key.

In a televised address to the nation, Russia's Putin said that the West wants to destroy Russia and added they are ready to take necessary steps to defend the sovereignty. "I tell the West, we have lots of weapons to reply, it is not a bluff," Putin added. Russia's defence ministry explained that 300,000 reserves will be called and that they will receive military training before being deployed.

Reflecting the risk-averse market environment, US stock index futures are losing between 0.2% and 0.3%, the 10-year US Treasury bond yield is down 1% and the US Dollar Index is trading at fresh multi-decade highs near 110.80, rising 0.5% on the day.

The shared currency stays under heavy selling pressure in the early European morning and EUR/USD trades deep in negative territory near 0.9900. 

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Pressured by broad-based dollar strength, GBP/USD slumped to its weakest level since 1985 at 1.1305 before rebounding toward 1.1350.

USD/JPY lost over 50 pips and erased its daily gains with the initial reaction to Putin's announcement. As of writing, the pair was trading flat on the day at 143.70.

Gold capitalized on safe-haven flows and climbed above $1,670 after having closed in negative territory on Tuesday.

Bitcoin lost more than 3% on Tuesday and struggled to stage a rebound. At the time of press, BTC/USD was trading virtually unchanged on the day at around $19,000. Ethereum failed to build on Monday's recovery gains and dropped toward $1,300 on Tuesday. ETH/USD was last seen posting modest gains at $1,330.