Ukraine tensions continue

<p>The markets have started the week in an orderly fashion as the Dow closed Friday towards record highs despite further tension in Ukraine. Pro-Russian separatists […]</p>

The markets have started the week in an orderly fashion as the Dow closed Friday towards record highs despite further tension in Ukraine. Pro-Russian separatists in the eastern region of Ukraine declared victory in a secession referendum yesterday which, if recognised by Russia, could push the country to the point of break up.

France and Germany are now threatening further sanctions on Russia if presidential elections do not take place on May 25th.The technical picture for the euro looks bleak following a close below 1.3770 on Friday. This points to a move to 1.3670 with a break here highlighting the potential for a complete reversal to 1.3380.

EMU CPI data is due for release on Thursday and will likely be scrutinised following ECB President Mario Draghi’s rate cut threat.

In other news, the market ignored the smallest Japanese current account surplus on record ahead of Q1 GDP data due for release on Thursday. The US Treasury has spoken out against the recent depreciation of the Yuan, saying that the currency still remains undervalued and it is important for China to continue moving to a market determined exchange rate.

Ahead of the UK inflation report on Wednesday, the Sunday Times reported that ‘the Bank of England is expected to signal this week that interest rate rises are likely to begin before the general election next year, as it upgrades Britain’s growth prospects yet again.’

It adds that Mark Carney, the Bank’s Governor, ‘is likely to rubber stamp market expectations that the first rate rise will come in the first quarter of 2015, which is three months earlier than the forecast given in February.’

 

EUR/USD

Supports 1.3740-1.3680-1.3620 | Resistance 1.3790-1.3830-1.3885

 

 

USD/JPY

Supports 101.70-101.30-101.10 | Resistance 102.00-102.20-102.50

 

 



GBP/USD

Supports 1.6840-1.6800-1.6760 | Resistance 1.6890-1.6920-1.6955

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.