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21 Apr 2014
EMEA EM Express: Pro-rRssian separatists in easter Ukraine fail to respect peace deal
FXStreet (Łódź) - The agreement struck by Ukrainian, Russian, EU and US officials last week in Geneva on the de-escalation of the crisis in Ukraine had already been called into question on Friday when pro-Russian separatists refused to leave the occupied government buildings. On Sunday three people were killed in a shooting which broke out near the town of Slaviansk, further undermining the fragile truce.
Three people were killed in the gunfight at a roadblock guarded by pro-Russian militants, but it is still unclear which side initiated the clash. Moscow has accused Ukrainians of attacking the checkpoint while Kiev claims it was a Russian provocation.
Russian foreign minister Sergey Lavrov said on Monday that the Kiev authorities were unwilling to “rein in and disarm nationalists and extremists" and that the US should take responsibility for Ukraine's proceedings instead of giving Russia ultimatums.
US Vice President Joe Biden is visiting Kiev today in order to hold talks on ways of resolving the situation.
But as Jamie Coleman warns on FXBeat: “To the extent that Ukraine causes risk aversion, be aware that that issue is not going to fade anytime soon. It may fade from the headlines, but the reality that Russia continues to try and reassemble the former Soviet Union, bit by bit, is here to stay.”
Economic data
There were no notable data releases in the EMEA EM over the weekend and on Monday due to the Easter holiday. Later this week South Africa will publish CPI numbers on Wednesday and the Producer Price index on Thursday.
Turkey will give information about Foreign Arrivals, Capacity Utilization and Manufacturing Confidence, all on Wednesday. On the same day the Central Bank of the Republic of Turkey will announce its interest rate policy.
The BBH Global Currency Strategy Team believe that the central bank will keep rates unchanged at 10%: “The lira has stabilized since the emergency hike in January, but inflation is still rising and so it’s too early to look for any easing yet.”
“At 8.4% y/y in March, CPI inflation remains above the 3-7% target range. More worrisome, core CPI rose 9.3% y/y in March, the highest since April 2007. Yet the government is concerned about sluggish growth, and Erdogan has already called on the bank to cut rates.”
Central Bank of Russia meets on Friday and is widely expected to hold rates steady at 7%. The BBH Global Currency Strategy Team suggest that Russian Q1 growth will be hurt by the Ukraine crisis and the West's sanctions, adding that “little improvement is seen ahead, with Q2 and Q3 growth both seen at 1.0%.”
“We would add that the risks are likely to the downside here,” the analysts say. “Yet rising inflation (6.9% in March was the highest since June 2013) and a vulnerable ruble is likely to keep the central bank on hold for now.”
Finally, on Friday Hungarian Unemployment Rate data will be released.
Technicals
The continuing Ukraine tensions weakened the ruble further on Monday. USD/RUB rose by 0.32% to 35.6517.
In the opinion of Igor Sayadov from RoboForex: “Today price may reach target at level of 35.81 and then form another descending structure towards level of 34.78. Later, in our opinion, instrument may continue growing up to reach level of 36.00.”
On Friday the USD/RUB daily FXStreet Trend Index was neutral, and the OB/OS Index neutral. RSI was at 46 at the last close and rose to 60 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 3005 pips, with ATR (14) expanding at 3921 pips. The 1D 200 SMA was at 33.6169, while the 1D 20 EMA was at 35.7358.
Three people were killed in the gunfight at a roadblock guarded by pro-Russian militants, but it is still unclear which side initiated the clash. Moscow has accused Ukrainians of attacking the checkpoint while Kiev claims it was a Russian provocation.
Russian foreign minister Sergey Lavrov said on Monday that the Kiev authorities were unwilling to “rein in and disarm nationalists and extremists" and that the US should take responsibility for Ukraine's proceedings instead of giving Russia ultimatums.
US Vice President Joe Biden is visiting Kiev today in order to hold talks on ways of resolving the situation.
But as Jamie Coleman warns on FXBeat: “To the extent that Ukraine causes risk aversion, be aware that that issue is not going to fade anytime soon. It may fade from the headlines, but the reality that Russia continues to try and reassemble the former Soviet Union, bit by bit, is here to stay.”
Economic data
There were no notable data releases in the EMEA EM over the weekend and on Monday due to the Easter holiday. Later this week South Africa will publish CPI numbers on Wednesday and the Producer Price index on Thursday.
Turkey will give information about Foreign Arrivals, Capacity Utilization and Manufacturing Confidence, all on Wednesday. On the same day the Central Bank of the Republic of Turkey will announce its interest rate policy.
The BBH Global Currency Strategy Team believe that the central bank will keep rates unchanged at 10%: “The lira has stabilized since the emergency hike in January, but inflation is still rising and so it’s too early to look for any easing yet.”
“At 8.4% y/y in March, CPI inflation remains above the 3-7% target range. More worrisome, core CPI rose 9.3% y/y in March, the highest since April 2007. Yet the government is concerned about sluggish growth, and Erdogan has already called on the bank to cut rates.”
Central Bank of Russia meets on Friday and is widely expected to hold rates steady at 7%. The BBH Global Currency Strategy Team suggest that Russian Q1 growth will be hurt by the Ukraine crisis and the West's sanctions, adding that “little improvement is seen ahead, with Q2 and Q3 growth both seen at 1.0%.”
“We would add that the risks are likely to the downside here,” the analysts say. “Yet rising inflation (6.9% in March was the highest since June 2013) and a vulnerable ruble is likely to keep the central bank on hold for now.”
Finally, on Friday Hungarian Unemployment Rate data will be released.
Technicals
The continuing Ukraine tensions weakened the ruble further on Monday. USD/RUB rose by 0.32% to 35.6517.
In the opinion of Igor Sayadov from RoboForex: “Today price may reach target at level of 35.81 and then form another descending structure towards level of 34.78. Later, in our opinion, instrument may continue growing up to reach level of 36.00.”
On Friday the USD/RUB daily FXStreet Trend Index was neutral, and the OB/OS Index neutral. RSI was at 46 at the last close and rose to 60 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 3005 pips, with ATR (14) expanding at 3921 pips. The 1D 200 SMA was at 33.6169, while the 1D 20 EMA was at 35.7358.