Back
16 Apr 2014
EMEA EM Express: Russian ruble advances ahead of talks on Ukraine in Geneva
FXStreet (Łódź) - Following yesterday's exacerbation of the Ukrainian-Russian crisis after Kiev launched a "anti-terrorist" operation against pro-Russian demonstrators in eastern Donetsk region, tensions continued to grow on Wednesday. In the morning separatist militants captured five armored personnel carriers and a tank from the Ukrainian army and drove them to the center of eastern Ukrainian towns of Kramatorsk and Slavyansk, waving Russian flags.
There were also reports of armed pro-Russian demonstrators taking control of the Donetsk city council building.
NATO secretary general Anders Fogh Rasmussen announced on Wednesday after talks with NATO ambassadors that the military allience would bolster its forces in eastern European, as a response to the unrest in Ukraine.
"You will see deployments at sea, in the air, on land to take place immediately – that means within days," Rasmussen assured during a press conference.
The military measures to be implemented soon include increasing jet missions over the Baltics, sending more ships and deplying more staff. NATO is also prepared to develop new defence plans if needed.
Meanwhile, the Russian ruble and bonds rose on Wednesday, on the news that sanctions against Russia wouldn't be expanded before the talks on Ukraine are held in Geneva on Thursday. The Micex Index rose by 0.7% before falling by 0.4%.
Bill Hubard, Chief Economist at Markets.com, comments on the impact of the crisis on other EMEA currencies: "With the current stand-off between Ukraine’s military and separatists in eastern Ukraine in place, and no clear solution in sight, we think further spikes higher in EUR/PLN and EUR/HUF are possible over the current uncertain period."
Economic data
The Czech Producer Price Index released by the Czech Statistical Office on Wednesday dropped by 0.2% on a monthly basis in March, after remaining unchanged the previous month. Year-on-year PPI slid 0.8% in March, slightly down from -0.7% seen in February.
February South African Retail Sales grew 2.2% year-on-year, following a 6.4% increase in January.
Russian annual Industrial production numbers, published on Tuesday, showed slowdown to 1.4% in March, from the 2.1% growth recorded the previous month, but still above forecasts of a 0.5% rise.
Dmitry Polevoy, Chief Economist at ING believes that Industrial Production growth in Russia could remain weak in the upcoming months due to the current headwinds such the “weakening domestic demand, weaker RUB and stricter access to credit/bond market together with higher borrowing costs as well as geopolitical risks and rising tensions in the eastern regions of Ukraine with Russia thought (by western countries) to be standing behind/involved, thus fueling a sanctions risk.”
Technicals
The Russian ruble strengthened on Wednesday against the dollar for the first time in four days on lack of new sanctions against Moscow. USD/RUB fell by 0.69% to 36.0197 in the European afternoon.
On Tuesday the USD/RUB daily FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was at 60 at the last close and declined to 42 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 3707 pips, with ATR (14) shrinking at 3733 pips. The 1D 200 SMA was at 33.5722, while the 1D 20 EMA was at 35.7577.
According to Bill Hubard: "Recent price action in the RUB and CEE currencies suggests a relatively benign interpretation of events in Russia and Ukraine. This could, in part. reflect positioning, particularly for the RUB, where long RUB positions are likely to be pretty light."
„However, with key talks taking place in Geneva later this week, there is a high risk of further escalation of sanctions and retaliatory measures taking place,” the expert warns.
There were also reports of armed pro-Russian demonstrators taking control of the Donetsk city council building.
NATO secretary general Anders Fogh Rasmussen announced on Wednesday after talks with NATO ambassadors that the military allience would bolster its forces in eastern European, as a response to the unrest in Ukraine.
"You will see deployments at sea, in the air, on land to take place immediately – that means within days," Rasmussen assured during a press conference.
The military measures to be implemented soon include increasing jet missions over the Baltics, sending more ships and deplying more staff. NATO is also prepared to develop new defence plans if needed.
Meanwhile, the Russian ruble and bonds rose on Wednesday, on the news that sanctions against Russia wouldn't be expanded before the talks on Ukraine are held in Geneva on Thursday. The Micex Index rose by 0.7% before falling by 0.4%.
Bill Hubard, Chief Economist at Markets.com, comments on the impact of the crisis on other EMEA currencies: "With the current stand-off between Ukraine’s military and separatists in eastern Ukraine in place, and no clear solution in sight, we think further spikes higher in EUR/PLN and EUR/HUF are possible over the current uncertain period."
Economic data
The Czech Producer Price Index released by the Czech Statistical Office on Wednesday dropped by 0.2% on a monthly basis in March, after remaining unchanged the previous month. Year-on-year PPI slid 0.8% in March, slightly down from -0.7% seen in February.
February South African Retail Sales grew 2.2% year-on-year, following a 6.4% increase in January.
Russian annual Industrial production numbers, published on Tuesday, showed slowdown to 1.4% in March, from the 2.1% growth recorded the previous month, but still above forecasts of a 0.5% rise.
Dmitry Polevoy, Chief Economist at ING believes that Industrial Production growth in Russia could remain weak in the upcoming months due to the current headwinds such the “weakening domestic demand, weaker RUB and stricter access to credit/bond market together with higher borrowing costs as well as geopolitical risks and rising tensions in the eastern regions of Ukraine with Russia thought (by western countries) to be standing behind/involved, thus fueling a sanctions risk.”
Technicals
The Russian ruble strengthened on Wednesday against the dollar for the first time in four days on lack of new sanctions against Moscow. USD/RUB fell by 0.69% to 36.0197 in the European afternoon.
On Tuesday the USD/RUB daily FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was at 60 at the last close and declined to 42 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 3707 pips, with ATR (14) shrinking at 3733 pips. The 1D 200 SMA was at 33.5722, while the 1D 20 EMA was at 35.7577.
According to Bill Hubard: "Recent price action in the RUB and CEE currencies suggests a relatively benign interpretation of events in Russia and Ukraine. This could, in part. reflect positioning, particularly for the RUB, where long RUB positions are likely to be pretty light."
„However, with key talks taking place in Geneva later this week, there is a high risk of further escalation of sanctions and retaliatory measures taking place,” the expert warns.