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17 Apr 2014
EMEA EM Express: East Ukraine unrest escalates while talks on the crisis progress in Geneva
FXStreet (Łódź) - In latest developments in the Ukraine crisis, EU, US, Russian and Ukrainian officials, who gathered in Geneva today to seek solutions to the quickly exacerbating situation, have been discussing the possibility of broadening sanctions against Moscow and the energy issue.
Earlier on Thursday violent clashes between Ukrainian forces and pro-Russian militants continued in the eastern Donetsk region. The town of Slaviansk remains under control of the separatists and in Mariupol a military base has been attacked, leaving three people dead.
Vladimir Putin said on Thursday in a televised interview that it was crucial "to figure out how to get out of this situation" but he also called the new Kiev government illegitimate and stressed that "if the elections are to be legitimate, the constitution of Ukraine needs to be revised."
In Geneva the Russian President pledged commitment to finding a peaceful solution to the conflict with Ukraine, stressing however that it was important for Kiev to give guarantees for its Russian-speaking regions.
Meanwhile the EU parliament discussed imposing new sanctions on Russia, which would be directed at the country's energy companies. It has also proposed an embargo on arms and dual-use technologies.
Economic data
On Wednesday South Africa released Retail Sales which year-on-year rose by 2.2% in February, down from the 6.4% increase seen the previous month.
The Polish Central Statistical Office informed that March Net Inflation edged up 1.1%, following 0.9% in February. Corporate Sector Wages data was also published, showing 4.8% growth in March, up from the 4% rise recorded the preceding month.
In the opinion of Rafał Benecki from ING wage pressure is not increasing yet. He points out that according to the Polish central bank's survey for the second quarter of the year “16.6% of corporates planned wage hikes (again on a net basis), which is below the level seen in 2Q06. Also, plans of wage hikes are well below the levels seen in years of the most tight conditions on the labour market in recent years, ie, in 2007-08.”
“In other words, the labour market acceleration is materializing via higher employment while the risk of wages pressure is limited at the moment,” the analyst adds.
On Thursday Poland revealed that the annual Industrial Output grew 5.4% in March, slightly up from the 5.3% February reading and below forecasts of a 6.4% increase. The year-on-year Producer Price Index dropped 1.3% in March, following a 1.4% decrease and below expectations of -1.2%.
Technicals
The escalation of the conflict in Ukraine has put downward pressure on central European currencies and especially the Polish złoty which has been declining against the euro since the beginning of April. Meanwhile on Thursday USD/PLN fell by 28% to 3.0224.
The ruble continued strengthening today, with the USD/RUB dropping by 0.74% to 35.7620. The currency has pared its drop against the dollar since the beginning of the year to 8.6%.
Earlier on Thursday violent clashes between Ukrainian forces and pro-Russian militants continued in the eastern Donetsk region. The town of Slaviansk remains under control of the separatists and in Mariupol a military base has been attacked, leaving three people dead.
Vladimir Putin said on Thursday in a televised interview that it was crucial "to figure out how to get out of this situation" but he also called the new Kiev government illegitimate and stressed that "if the elections are to be legitimate, the constitution of Ukraine needs to be revised."
In Geneva the Russian President pledged commitment to finding a peaceful solution to the conflict with Ukraine, stressing however that it was important for Kiev to give guarantees for its Russian-speaking regions.
Meanwhile the EU parliament discussed imposing new sanctions on Russia, which would be directed at the country's energy companies. It has also proposed an embargo on arms and dual-use technologies.
Economic data
On Wednesday South Africa released Retail Sales which year-on-year rose by 2.2% in February, down from the 6.4% increase seen the previous month.
The Polish Central Statistical Office informed that March Net Inflation edged up 1.1%, following 0.9% in February. Corporate Sector Wages data was also published, showing 4.8% growth in March, up from the 4% rise recorded the preceding month.
In the opinion of Rafał Benecki from ING wage pressure is not increasing yet. He points out that according to the Polish central bank's survey for the second quarter of the year “16.6% of corporates planned wage hikes (again on a net basis), which is below the level seen in 2Q06. Also, plans of wage hikes are well below the levels seen in years of the most tight conditions on the labour market in recent years, ie, in 2007-08.”
“In other words, the labour market acceleration is materializing via higher employment while the risk of wages pressure is limited at the moment,” the analyst adds.
On Thursday Poland revealed that the annual Industrial Output grew 5.4% in March, slightly up from the 5.3% February reading and below forecasts of a 6.4% increase. The year-on-year Producer Price Index dropped 1.3% in March, following a 1.4% decrease and below expectations of -1.2%.
Technicals
The escalation of the conflict in Ukraine has put downward pressure on central European currencies and especially the Polish złoty which has been declining against the euro since the beginning of April. Meanwhile on Thursday USD/PLN fell by 28% to 3.0224.
The ruble continued strengthening today, with the USD/RUB dropping by 0.74% to 35.7620. The currency has pared its drop against the dollar since the beginning of the year to 8.6%.