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20 May 2014
EMEA EM Express: Russian troops still at Ukrainian borders, Medvedev threatens with new Cold War, but ruble still strengthens
According to NATO, there was still no sign of the Russian troops' pullout away from Ukrainian borders on Tuesday, despite the pledges made by President Valdimir Putin on Monday. The Russian Defence Ministry explained that such an action required time, but didn't provide any details as to how long it would take or how many soldiers would be withdrawn.
Despite the lack of confirmation of Russian forces being pulled back, investors' confidence that the Russian-Ukrainian conflict was heading towards a de-escalation has risen and the ruble strengthened for the third running day on Tuesday.
The TD Securities team of analysts believe that the ruble's advance is “a typical reversal of currency weakness given the absence of any real news on the Russo-Ukrainian front.”
“We continue to see this as a binary trade– performing well on the ‘no news is good news’ rule, but at risk of sharp corrections given the Presidential election in Ukraine on May 25th,” the experts add.
Meanwhile, during a press conference in Moscow on Monday, Russian Foreign Minister Sergey Lavrov urged the authorities in Kiev to stop the military operation against the separatists in the eastern regions of Ukraine, to facilitate the continuation of the peace talks which kicked off last Friday.
“We still insist on the first unconditional step: a halt of the so-called antiterrorism operation, which is turning into actions aimed at terrorizing citizens of Ukraine just for their political convictions,” he said.
In an interview for Bloomberg Russian Prime Minister Dmitry Medvedev suggested on Monday that the economic sanctions imposed by the US and the EU on Russia were reminiscent of Cold War measures. He stated that in the face of a lack of compromise, a new Cold War could emerge.
Economic data
The Polish annual Producer Price Index data, released on Tuesday, showed a 0.7% drop in April, up from the 1.3% decline seen in March, in line with expectations
Polish Industrial Output climbed 5.4% year-on-year, following a 5.4% rise and beating consensus of +5%.
Russian Industrial Production, also released on Tuesday grew 2.4% in April, up a notch from the 1.4% increase and above projections of a 0.9% rise.
Technicals
The Russian ruble rose 0.1 percent to 40.3434 against the central bank’s target dollar-euro basket on Tuesday. It strengthened against the euro by 0.2% to 47.3875 and was little changed against the greenback at 34.5750.
On Monday the USD/RUB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index oversold. RSI was at 33 at the last close, and has moved up to 43 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 4497 pips, with ATR (14) shrinking at 3164 pips. The 1D 200 SMA was at 33.8947, while the 1D 20 EMA was at 35.1975.
USD/UAH was unchanged on Tuesday at 11.7520.
Despite the lack of confirmation of Russian forces being pulled back, investors' confidence that the Russian-Ukrainian conflict was heading towards a de-escalation has risen and the ruble strengthened for the third running day on Tuesday.
The TD Securities team of analysts believe that the ruble's advance is “a typical reversal of currency weakness given the absence of any real news on the Russo-Ukrainian front.”
“We continue to see this as a binary trade– performing well on the ‘no news is good news’ rule, but at risk of sharp corrections given the Presidential election in Ukraine on May 25th,” the experts add.
Meanwhile, during a press conference in Moscow on Monday, Russian Foreign Minister Sergey Lavrov urged the authorities in Kiev to stop the military operation against the separatists in the eastern regions of Ukraine, to facilitate the continuation of the peace talks which kicked off last Friday.
“We still insist on the first unconditional step: a halt of the so-called antiterrorism operation, which is turning into actions aimed at terrorizing citizens of Ukraine just for their political convictions,” he said.
In an interview for Bloomberg Russian Prime Minister Dmitry Medvedev suggested on Monday that the economic sanctions imposed by the US and the EU on Russia were reminiscent of Cold War measures. He stated that in the face of a lack of compromise, a new Cold War could emerge.
Economic data
The Polish annual Producer Price Index data, released on Tuesday, showed a 0.7% drop in April, up from the 1.3% decline seen in March, in line with expectations
Polish Industrial Output climbed 5.4% year-on-year, following a 5.4% rise and beating consensus of +5%.
Russian Industrial Production, also released on Tuesday grew 2.4% in April, up a notch from the 1.4% increase and above projections of a 0.9% rise.
Technicals
The Russian ruble rose 0.1 percent to 40.3434 against the central bank’s target dollar-euro basket on Tuesday. It strengthened against the euro by 0.2% to 47.3875 and was little changed against the greenback at 34.5750.
On Monday the USD/RUB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index oversold. RSI was at 33 at the last close, and has moved up to 43 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 4497 pips, with ATR (14) shrinking at 3164 pips. The 1D 200 SMA was at 33.8947, while the 1D 20 EMA was at 35.1975.
USD/UAH was unchanged on Tuesday at 11.7520.