12 May 2014
EMEA EM Express: Donetsk votes in favor succession from Ukraine, EU imposes new sanctions on Russia
FXStreet (Łódź) - On Sunday pro-Russian separatists held controversial referendums on the status of the eastern Ukrainian regions. According to the organizers the vote carried out in Donetsk resulted in a 90% support for secession while the one in Luhansk is expected to show a similar outcome.
On Monday Moscow called for the implementation of the outcome of the vote, which has been rejected by Kiev and the West. Russia suggested that the Organization for Security and Cooperation in Europe could take part in negotiations between the Ukrainian authorities and the separatist leaders.
But Kiev called the vote a "criminal farce.” The interim president Oleksander Turchinov released a statement in which he said that "these processes are inspired by the leadership of the Russian Federation and are destructive to the Donetsk and Luhansk regions' economies and threaten the lives and welfare of citizens and have the aim of destabilizing the situation in Ukraine."
“The referenda may serve to further increase the risk of an escalation in military tensions between pro-Russia separatists and the Ukraine authorities,” the Bank of Tokyo-Mitsubishi team of analysts suggest.
Also on Monday the European Union foreign ministers announced a broadening of sanctions against Russia. Asset freezes and travel bans have been imposed on two more Crimean firms and 13 individuals. The finance ministers also tried to determine what would be the trigger for another round of sanctions against Moscow.
Meanwhile on Saturday the ruling African National Congress was confirmed the winner of last week's election in South Africa. Despite some delays and protests in Johannesburg the vote has been carried out smoothly.
According to Bill Hubard, Chief economuist at Markets.com: “As the post-election rally fades, we expect the market’s attention to return to South Africa’s economic challenges.”
“Markets.com thinks the risks have risen for an unchanged stance at the SARB’s 22 May MPC meeting, given the recent weakness in economic activity – including employment and manufacturing production – and the recent rally in the exchange rate.”
Economic data
The Czech Republic released inflation and employment data on Monday. Month-on-month CPI remained flat in April, against expectations of rising 0.2%. On an annual basis inflation ticked up 0.1%, slightly down from +0.2% in March.
The Unemployment rate came in at 7.9% in April, down from 8.3% in March, in line with forecasts.
On Friday the South African Reserve Bank released Gross Gold & Forex Reserves data showing an increase to $49.555B in April from $49.454B in March. Net Gold & Forex Reserves declined to $44.857B from $45.042B.
Technicals
The MICEX Index rose 0.7% and the Russian ruble strengthened on Monday following the announcement that Ukraine's eastern regions voted in favor of succession in the Sunday referendum.
On Friday the USD/RUB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 42 at the last close, and has slid to 25 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 3158 pips, with ATR (14) expanding at 3574 pips. The 1D 200 SMA was at 33.8389, while the 1D 20 EMA was at 35.5517.
The Ukranian hryvnia dropped 0.8% to 11.7450 at midday.
USD/ZAR was up 0.12% at 10.3648 on Monday. The African rand weakened on Friday after strengthening to a five-month high of 10.3128 on May 8, as the election results failed to boost investor confidence.
On Friday the USD/ZAR daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 36 at the last close, and has climbed to 58 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 793 pips, with ATR (14) expanding at 1129 pips. The 1D 200 SMA was at 10.4111, while the 1D 20 EMA was at 10.5067 .
On Monday Moscow called for the implementation of the outcome of the vote, which has been rejected by Kiev and the West. Russia suggested that the Organization for Security and Cooperation in Europe could take part in negotiations between the Ukrainian authorities and the separatist leaders.
But Kiev called the vote a "criminal farce.” The interim president Oleksander Turchinov released a statement in which he said that "these processes are inspired by the leadership of the Russian Federation and are destructive to the Donetsk and Luhansk regions' economies and threaten the lives and welfare of citizens and have the aim of destabilizing the situation in Ukraine."
“The referenda may serve to further increase the risk of an escalation in military tensions between pro-Russia separatists and the Ukraine authorities,” the Bank of Tokyo-Mitsubishi team of analysts suggest.
Also on Monday the European Union foreign ministers announced a broadening of sanctions against Russia. Asset freezes and travel bans have been imposed on two more Crimean firms and 13 individuals. The finance ministers also tried to determine what would be the trigger for another round of sanctions against Moscow.
Meanwhile on Saturday the ruling African National Congress was confirmed the winner of last week's election in South Africa. Despite some delays and protests in Johannesburg the vote has been carried out smoothly.
According to Bill Hubard, Chief economuist at Markets.com: “As the post-election rally fades, we expect the market’s attention to return to South Africa’s economic challenges.”
“Markets.com thinks the risks have risen for an unchanged stance at the SARB’s 22 May MPC meeting, given the recent weakness in economic activity – including employment and manufacturing production – and the recent rally in the exchange rate.”
Economic data
The Czech Republic released inflation and employment data on Monday. Month-on-month CPI remained flat in April, against expectations of rising 0.2%. On an annual basis inflation ticked up 0.1%, slightly down from +0.2% in March.
The Unemployment rate came in at 7.9% in April, down from 8.3% in March, in line with forecasts.
On Friday the South African Reserve Bank released Gross Gold & Forex Reserves data showing an increase to $49.555B in April from $49.454B in March. Net Gold & Forex Reserves declined to $44.857B from $45.042B.
Technicals
The MICEX Index rose 0.7% and the Russian ruble strengthened on Monday following the announcement that Ukraine's eastern regions voted in favor of succession in the Sunday referendum.
On Friday the USD/RUB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 42 at the last close, and has slid to 25 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 3158 pips, with ATR (14) expanding at 3574 pips. The 1D 200 SMA was at 33.8389, while the 1D 20 EMA was at 35.5517.
The Ukranian hryvnia dropped 0.8% to 11.7450 at midday.
USD/ZAR was up 0.12% at 10.3648 on Monday. The African rand weakened on Friday after strengthening to a five-month high of 10.3128 on May 8, as the election results failed to boost investor confidence.
On Friday the USD/ZAR daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 36 at the last close, and has climbed to 58 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 793 pips, with ATR (14) expanding at 1129 pips. The 1D 200 SMA was at 10.4111, while the 1D 20 EMA was at 10.5067 .