8 Apr 2014
EMEA EM Express: Russian, Ukrainian and EU officials to meet on renewed separatist tensions
FXStreet (Łódź) - Tensions in Ukraine have started growing again, following the outbreak of pro-Russian demonstrations in three eastern Ukrainian cities over the weekend. Protesters in Donetsk, Luhansk and Kharkiv took over government buildings and called for an independence referendum, such as that conducted in Crimea. Meanwhile Russia warned that this might be a beginning of a civil war.
Ukraine's Prime Minister Arseny Yatseniuk said that the protests were a Russian provocation, aimed at fomenting unrest and making way for another intervention in Ukraine. Also the US said there was evidence that the demonstrators were not local people and warned Russia not to aggravate the situation. US Secretary of State John Kerry said that it would “incur costs.”
Following a telephone conversation with Russian Foreign Minister Sergei Lavrov Kerry announced that withing the next ten days Russian, Ukrainian and EU officials will hold a meeting to discuss the situation.
The BBH Global Currency Strategy Team comment: “The situation remains fluid, but such cat-and-mouse actions are to be expected. We maintain our base case that despite the likelihood of periodic flare-ups in Ukraine, Russia will not risk antagonizing the West with further military actions. Instead, the battle seems likely to shift further to financial channels (sanctions and counter-sanctions) and away from the battleground itself in eastern Ukraine.”
Meanwhile in Hungary, Prime Minister Viktor Orban's governing Fidesz party won parliamentary elections held over the weekend, despite growing criticism that under their rule the independence of the judiciary and the media has been drastically reduced.
Economic data
Statistics Estonia revealed don Monday that the Estonian CPI accelerated to 0.3% in March (MoM), from 0.1% registered in February.
On Tuesday Hungary and Turkey published Industrial Production data for February. On an annual basis Hungary's Industrial Output jumped 8.1%, following a 6.1% increase and considerably above consensus of +6%.
Turkey's Industrial Output grew 4.9%, down from the 7.3% rise and almost in line with forecasts of a 5% increase.
Jacqui Douglas, Senior Global Strategist at TD Securities points out that “IP headline and details show that weakness of economic activity is starting to pass through into the economy.”
The Czech Unemployment rate, also released on Tuesday ticked down to 8.3% in March from 8.6% in February, beating expectations of a slide to 8.4%.
South Africa's Business Confidence Index increased from 91.9 in February to 92.7 in March, the highest level in a year.
Technicals
Despite investor concerns about the possibility of further sanctions being imposed on Russia, the ruble posted a strong performance on Monday.
USD/RUB fell by 0.31% to 2.0917. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index oversold. RSI was neutral at 48 at the last close. The Daily 2-StDev Volatility Bandwidth was expanding at 4909 pips, with ATR (14) expanding at 4234 pips. The 1D 200 SMA was at 33.4937, while the 1D 20 EMA was at 35.6935.
The Turkish lira has been consolidating gains since Prime Minister Recep Tayyip Erdogan's Justice and Development Party (AKP)won local elections last week.
USD/TRY dropped by 0.87% on Monday to 2.0917. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index oversold. RSI was neutral at 29 at the last close and moved up to 32 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 459 pips, with ATR (14) shrinking at 278 pips. The 1D 200 SMA was at 2.0701, while the 1D 20 EMA was at 2.1736.
Ukraine's Prime Minister Arseny Yatseniuk said that the protests were a Russian provocation, aimed at fomenting unrest and making way for another intervention in Ukraine. Also the US said there was evidence that the demonstrators were not local people and warned Russia not to aggravate the situation. US Secretary of State John Kerry said that it would “incur costs.”
Following a telephone conversation with Russian Foreign Minister Sergei Lavrov Kerry announced that withing the next ten days Russian, Ukrainian and EU officials will hold a meeting to discuss the situation.
The BBH Global Currency Strategy Team comment: “The situation remains fluid, but such cat-and-mouse actions are to be expected. We maintain our base case that despite the likelihood of periodic flare-ups in Ukraine, Russia will not risk antagonizing the West with further military actions. Instead, the battle seems likely to shift further to financial channels (sanctions and counter-sanctions) and away from the battleground itself in eastern Ukraine.”
Meanwhile in Hungary, Prime Minister Viktor Orban's governing Fidesz party won parliamentary elections held over the weekend, despite growing criticism that under their rule the independence of the judiciary and the media has been drastically reduced.
Economic data
Statistics Estonia revealed don Monday that the Estonian CPI accelerated to 0.3% in March (MoM), from 0.1% registered in February.
On Tuesday Hungary and Turkey published Industrial Production data for February. On an annual basis Hungary's Industrial Output jumped 8.1%, following a 6.1% increase and considerably above consensus of +6%.
Turkey's Industrial Output grew 4.9%, down from the 7.3% rise and almost in line with forecasts of a 5% increase.
Jacqui Douglas, Senior Global Strategist at TD Securities points out that “IP headline and details show that weakness of economic activity is starting to pass through into the economy.”
The Czech Unemployment rate, also released on Tuesday ticked down to 8.3% in March from 8.6% in February, beating expectations of a slide to 8.4%.
South Africa's Business Confidence Index increased from 91.9 in February to 92.7 in March, the highest level in a year.
Technicals
Despite investor concerns about the possibility of further sanctions being imposed on Russia, the ruble posted a strong performance on Monday.
USD/RUB fell by 0.31% to 2.0917. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index oversold. RSI was neutral at 48 at the last close. The Daily 2-StDev Volatility Bandwidth was expanding at 4909 pips, with ATR (14) expanding at 4234 pips. The 1D 200 SMA was at 33.4937, while the 1D 20 EMA was at 35.6935.
The Turkish lira has been consolidating gains since Prime Minister Recep Tayyip Erdogan's Justice and Development Party (AKP)won local elections last week.
USD/TRY dropped by 0.87% on Monday to 2.0917. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index oversold. RSI was neutral at 29 at the last close and moved up to 32 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 459 pips, with ATR (14) shrinking at 278 pips. The 1D 200 SMA was at 2.0701, while the 1D 20 EMA was at 2.1736.