1 May 2014
EMEA EM Express: Russian-Ukrainian tensions continue, ruble reverses course
FXStreet (Łódź) - Concerns about a further escalation of the Ukrainian-Russian crisis increased on Thursday after it was reported that a Russian military attaché had been detained in Kiev on the suspicion of spying. Ukraine's military forces conducted exercises in the capital overnight, with president Oleksandr Turchynov declaring that they were preparing for a potential Russian invasion.
The Russian foreign ministry responded with a statement in which it insisted that Kiev “immediately ceases the bellicose rhetoric, which is aimed at intimidating its own population." Russian President Vladimir Putin, who spoke on the phone with German Chancellor Angela Merkel, called for the withdrawal of Ukrainian forces from the country's south-eastern regions, while she asked for help in releasing the seven OSCE observers from the hands of pro-Russian separatists
On Wednesday Ukrainian PM Arseny Yatseniuk said that the government was planning to ask the parliament to approve holding a poll on Ukrainian unity and territorial integrity on May 25, the same day for which the presidential election had been scheduled. On Thursday Russia's foreign ministry called the move a “sham” suggesting that it would only serve to exacerbate the crisis in the country
On Wednesday the IMF approved an aid package for Ukraine amounting to 17 billion dollars, conditional on the country's implementation of a series of economic reforms, affecting energy prices and involving tax hikes, among others. The organization also announced a downgrade of the 2014 economic growth outlook for Russia to 0.2% from the previous estimate of 1.3%, due to the risks stemming from geopolitical tensions and the sanctions imposed by the West.
Meanwhile in Turkey a fresh wave of anti-government protests erupted on May Day, with demonstrators gathering in Istanbul’s Taksim Square despite the fact that the PM Recep Tayyip Erdoga prohibited it from being used for protests. The BBH Global Currency Strategy Team believe that if we won't see a “major spike in violence tonight, there are unlikely to be broader consequences for now. However, it is a reminder of still-simmering tensions,” they add.
Economic data
On Wednesday the Israeli Central bureau of statistics informed that the Quarterly Unemployment Rate remained unchanged at 5.8% in March from the February reading (revised up fro 5.7%).
Russian Bank reserves grew to USD 482.70B from USD 477.70B.
South Africa's trade surplus of 1.72B rands recorded in February shifted to a -11.39B rand deficit in March, considerably below forecasts of a -1.00B deficit.
Dorothee Gasser from ING believes that “the poor March trade balance reading illustrates how difficult it will be for South Africa to stage a significant improvement in its external account this year. Some will materialize, but it is likely to remain unimpressive and not enough to be the primary justification for a strong ZAR.”
Technicals
The Russian ruble declined on Wednesday after three days of increases on worries about the escalation of the Russian-Ukraininian conflict. At the moment of writing USD/RUB was down by 0.05% at 35.6045.
On Wednesday the USD/RUB daily FXStreet Trend Index was strongly bearish, with the OB/OS Index neutral. RSI was at 47 at the last close, and has increased to 55 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 2147 pips, with ATR (14) shrinking at 3081 pips. The 1D 200 SMA was at 33.7508, while the 1D 20 EMA was at 35.7475 .
The Russian foreign ministry responded with a statement in which it insisted that Kiev “immediately ceases the bellicose rhetoric, which is aimed at intimidating its own population." Russian President Vladimir Putin, who spoke on the phone with German Chancellor Angela Merkel, called for the withdrawal of Ukrainian forces from the country's south-eastern regions, while she asked for help in releasing the seven OSCE observers from the hands of pro-Russian separatists
On Wednesday Ukrainian PM Arseny Yatseniuk said that the government was planning to ask the parliament to approve holding a poll on Ukrainian unity and territorial integrity on May 25, the same day for which the presidential election had been scheduled. On Thursday Russia's foreign ministry called the move a “sham” suggesting that it would only serve to exacerbate the crisis in the country
On Wednesday the IMF approved an aid package for Ukraine amounting to 17 billion dollars, conditional on the country's implementation of a series of economic reforms, affecting energy prices and involving tax hikes, among others. The organization also announced a downgrade of the 2014 economic growth outlook for Russia to 0.2% from the previous estimate of 1.3%, due to the risks stemming from geopolitical tensions and the sanctions imposed by the West.
Meanwhile in Turkey a fresh wave of anti-government protests erupted on May Day, with demonstrators gathering in Istanbul’s Taksim Square despite the fact that the PM Recep Tayyip Erdoga prohibited it from being used for protests. The BBH Global Currency Strategy Team believe that if we won't see a “major spike in violence tonight, there are unlikely to be broader consequences for now. However, it is a reminder of still-simmering tensions,” they add.
Economic data
On Wednesday the Israeli Central bureau of statistics informed that the Quarterly Unemployment Rate remained unchanged at 5.8% in March from the February reading (revised up fro 5.7%).
Russian Bank reserves grew to USD 482.70B from USD 477.70B.
South Africa's trade surplus of 1.72B rands recorded in February shifted to a -11.39B rand deficit in March, considerably below forecasts of a -1.00B deficit.
Dorothee Gasser from ING believes that “the poor March trade balance reading illustrates how difficult it will be for South Africa to stage a significant improvement in its external account this year. Some will materialize, but it is likely to remain unimpressive and not enough to be the primary justification for a strong ZAR.”
Technicals
The Russian ruble declined on Wednesday after three days of increases on worries about the escalation of the Russian-Ukraininian conflict. At the moment of writing USD/RUB was down by 0.05% at 35.6045.
On Wednesday the USD/RUB daily FXStreet Trend Index was strongly bearish, with the OB/OS Index neutral. RSI was at 47 at the last close, and has increased to 55 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 2147 pips, with ATR (14) shrinking at 3081 pips. The 1D 200 SMA was at 33.7508, while the 1D 20 EMA was at 35.7475 .