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14 May 2014
EMEA EM Express: Polish zloty advances as inflation hits 10-month low; Peace talks begin in Kiev
FXStreet (Łódź) - Peace talks between Ukrainian and Russian officials, with the participation of Organisation for Security and Cooperation in Europe representatives, have begun on Wednesday in Kiev. On Tuesday Ukraine had suffered the haveiest losses of its troops so far, as pro-Russian militants killed seven of them in an ambush.
Earlier on Wednesday Sergei Naryshkin, the speaker of the lower house of the Russian parliament, said that the president elected in the Ukrainian vote scheduled for 25 May would not be legitimate, as long as there is no dialogue with the pro-Russian separatists in the eastern regions of the country.
As the RBS economists note, despite the fact that the situation in Ukraine is drifting towards civil war, „the market appears to be taking a view that the economic fallout from this conflict and potential sanctions will be contained.” The Russian ruble reached its strongest level since February on Tuesday, while the RTS Russian stock index gained 1.6% since February.
"Russia is planning its first government RUB bond auction tomorrow in more than a month, a sign of investor confidence returning,” the analysts add. "The EUR is modestly weaker and it may be moving somewhat counter to the RUB, reflecting capital returning to RUB after recent flight.”
Economic data
Polish inflation remained flat month-on-month in April, after rising 0.1% in March, the Central Statistical Office informed on Wednesday. Market consensus pointed to a 0.3% rise.
On an annual basis CPI growth slowed down to a 10-month low of 0.3% from 0.7% and below expectations of 0.6%. The lower than expected reading was brought about by “the disinflationary trend in the rest of Europe and yesterday’s downside surprise in Hungary (albeit very specific to local drivers in the country),” in the opinion of Jacqui Douglas, Senior Global Strategist at TD Securities.
The Polish M3 Money Supply annual numbers came in at 5.4% in April, up from 5.1% in March and above forecasts of 5.2%.
Earlier on Wednesday South Africa published annual Retail Sales for March, which increased by 1%, down from 2.3% in February, a notch below expectations.
Furthermore, the South African Business Confidence Index slid to 92.6 in April from 92.7 in March, the South African Chamber of Commerce & Industry said.
Technicals
Following the release of Polish inflation numbers, the zloty strengthened to 4.1856 against the euro. USD/PLN was up 0.08% at 3.0551.
On Tuesday the USD/PLN daily FXStreet Trend Index was slightly bullish, with the OB/OS Index overbought. RSI was at 61 at the last close, and has climbed to 65 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 95 pips, with ATR (14) expanding at 180 pips. The 1D 200 SMA was at 3.0790, while the 1D 20 EMA was at 3.0315.
USD/RUB was down 0.45% at 34.7139 at the moment of writing.
On Tuesday the USD/RUB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 36 at the last close, and so far it climbed to 49. Daily 2-StDev Volatility Bandwidth was expanding at 3362 pips, with ATR (14) expanding at 3489 pips. The 1D 200 SMA was at 33.8589, while the 1D 20 EMA was at 35.4410.
Earlier on Wednesday Sergei Naryshkin, the speaker of the lower house of the Russian parliament, said that the president elected in the Ukrainian vote scheduled for 25 May would not be legitimate, as long as there is no dialogue with the pro-Russian separatists in the eastern regions of the country.
As the RBS economists note, despite the fact that the situation in Ukraine is drifting towards civil war, „the market appears to be taking a view that the economic fallout from this conflict and potential sanctions will be contained.” The Russian ruble reached its strongest level since February on Tuesday, while the RTS Russian stock index gained 1.6% since February.
"Russia is planning its first government RUB bond auction tomorrow in more than a month, a sign of investor confidence returning,” the analysts add. "The EUR is modestly weaker and it may be moving somewhat counter to the RUB, reflecting capital returning to RUB after recent flight.”
Economic data
Polish inflation remained flat month-on-month in April, after rising 0.1% in March, the Central Statistical Office informed on Wednesday. Market consensus pointed to a 0.3% rise.
On an annual basis CPI growth slowed down to a 10-month low of 0.3% from 0.7% and below expectations of 0.6%. The lower than expected reading was brought about by “the disinflationary trend in the rest of Europe and yesterday’s downside surprise in Hungary (albeit very specific to local drivers in the country),” in the opinion of Jacqui Douglas, Senior Global Strategist at TD Securities.
The Polish M3 Money Supply annual numbers came in at 5.4% in April, up from 5.1% in March and above forecasts of 5.2%.
Earlier on Wednesday South Africa published annual Retail Sales for March, which increased by 1%, down from 2.3% in February, a notch below expectations.
Furthermore, the South African Business Confidence Index slid to 92.6 in April from 92.7 in March, the South African Chamber of Commerce & Industry said.
Technicals
Following the release of Polish inflation numbers, the zloty strengthened to 4.1856 against the euro. USD/PLN was up 0.08% at 3.0551.
On Tuesday the USD/PLN daily FXStreet Trend Index was slightly bullish, with the OB/OS Index overbought. RSI was at 61 at the last close, and has climbed to 65 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 95 pips, with ATR (14) expanding at 180 pips. The 1D 200 SMA was at 3.0790, while the 1D 20 EMA was at 3.0315.
USD/RUB was down 0.45% at 34.7139 at the moment of writing.
On Tuesday the USD/RUB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 36 at the last close, and so far it climbed to 49. Daily 2-StDev Volatility Bandwidth was expanding at 3362 pips, with ATR (14) expanding at 3489 pips. The 1D 200 SMA was at 33.8589, while the 1D 20 EMA was at 35.4410.