Category: Countries & Regions

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Russia’s Ruble in a world of pain

Russia’s ruble is in a world of pain, having lost one-third of its value against the Dollar over the last 40 months. The down-trend is accelerating, emphasized by two large 13-week Twiggs Momentum peaks below the zero line.

RUBUSD

Vladimir Putin has backed himself into a corner and has no way out but to escalate. His current strategy in Eastern Europe of one-step-back-two-steps-forward is becoming predictable and the European Union is likely to run out of patience, responding with further sanctions. Increasingly threatening behavior in the Baltic is also unlikely to intimidate, merely strengthening alliances and resolve.

George Soros on the Ukraine crisis:

https://twitter.com/andersostlund/status/525183504066560000

Former Swedish PM Carl Bildt seems to agree:

Ambrose Evans-Pritchard weighs in on Russia’s economic woes:

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Treasury yields fall and the Dollar finds support

The yield on ten-year Treasury Notes is in a primary down-trend (since breaking support at 2.50%). Expect retracement to test resistance at 2.30%. Respect is likely and would indicate another test of primary support at 2.00%*. A 13-week Twiggs Momentum peak below zero signals bear strength. Recovery above 2.30 is unlikely, but would test the descending trendline and resistance at 2.50%.

10-Year Treasury Yields

* Target calculation: 2.30 – ( 2.60 – 2.30 ) = 2.00

Inflation expectations are falling, with the 5-year inflation breakeven rate (5-year treasury yields minus the 5-year TIPS rate) now close to 1.4%.

5-Year Inflation Breakeven Rate

The Dollar Index respected its new support level at 84.50. Recovery above 86.5 would confirm a primary advance and a target of 89*. Rising 13-week Twiggs Momentum suggests a healthy (primary) up-trend. Failure of support at 84.50 is unlikely, but would warn of a correction to the primary trendline.

Dollar Index

* Target calculation: 84 + ( 84 – 79 ) = 89.00

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Shots fired in parliament building, Ottawa [video]

The suspect had apparently already shot and killed a reservist soldier standing guard at the National War Memorial.

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ASX 200 breaks resistance

The ASX 200 broke resistance at 5340/5350 in the first hour of trading this morning. Expect retracement to test the new support level on the hourly chart. Respect would confirm that the correction is over.

ASX 200

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Get Ready for Iraq War IV

Retired army officer John A. Nagl writes:

The United States is now at war in Iraq for the third time in my lifetime, and after being in the middle of the first two I’m planning to sit this one out.

The first Iraq war was necessary and conducted well, as wars go; the second was unnecessary and conducted poorly at first, but ended up in a reasonable place given what a fiasco it had been at the start. This third war was entirely preventable, caused by a premature departure of U.S. troops after the second. Although it’s too soon to say how it will turn out, it is not too early to say that unless we get the endgame right, the United States will fight yet another war in Iraq before too long.

Read more at Get Ready for Iraq War IV.

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In Milan, Germany’s leader strikes the right note on Russian sanctions | Washington Post

Opinion from the Washington Post:

To her credit, Ms. Merkel is staking out a firm position, perhaps because she has spent more time than any other Western leader talking to Mr. Putin about Ukraine. On Monday she said, “There’s a long way to a cease-fire, unfortunately,” and added that Russia would have to respect Ukraine’s territorial integrity “not just on paper” before sanctions could be lifted. That added weight to comments last week by Secretary of State John F. Kerry, who — even as he tried to promote U.S.-Russian cooperation on other issues — said Russia would have to withdraw “heavy equipment” and allow its border with Ukraine “to be properly monitored and secured” to win sanctions relief.

Mr. Putin is unlikely ever to meet those terms. To do so would doom Novorossiya, which can’t survive without military and material support from Russia. As the sanctions bite, he is as liable to escalate his aggression as to offer concessions….

Further escalation is not likely — it’s inevitable. Decisive action now will save much pain later. Read Putin’s Coup, Ben Judah’s piece on how Vladimir Putin has consolidated his hold on power. The parallels with Germany’s NSDAP in the 1930s are chilling — using fear to quell dissent.

Read more at In Milan, Germany’s leader strikes the right note on Russian sanctions | The Washington Post.

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Hang Seng falters

Hong Kong’s Hang Seng Index is testing support at 23000. Reversal of 13-week Twiggs Money Flow below zero warns of a primary down-trend. Breach of support at 21000 would confirm.

Hang Seng Index

China’s Shanghai Composite Index continues to test its new support level at 2340. Respect would suggest an advance to 2500*. Breach would warn of a correction. I remain wary because of weakness in Hong Kong.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

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India’s Sensex tests support

India’s Sensex penetrated its secondary rising trendline, warning of a correction. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure. Breach of support at 26000 would offer a target of 25000 and the primary trendline. Respect of support and follow-through above the descending flag would indicate an advance to 28000*.

Sensex

* Target calculation: 27000 + ( 27000 – 26000 ) = 28000

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Aussie Dollar and ASX find support

The Australian Dollar is testing resistance at $0.8900, but the primary trend is down. Breakout would suggest a bear rally, while respect would warn of another decline. 13-Week Twiggs Momentum below zero indicates a primary down-trend. Breach of primary support at $0.8650 would offer a target of $0.80*.

AUDUSD

* Target calculation: 0.87 – ( 0.94 – 0.87 ) = 0.80

ASX 200 penetrated its descending trendline, suggesting the correction is over. The index would be further buoyed by a rally of the Aussie Dollar. Bullish divergence and recovery of 21-day Twiggs Money Flow above zero indicates medium-term buying pressure. Breach of resistance at 5350 would strengthen the bull signal. Reversal below 5250, however, would warn of a test of primary support at 5000/5050.

ASX 200

* Target calculation: 5350 – ( 5650 – 5350 ) = 5050

The ASX 200 VIX at 15.5 continues to indicate low risk typical of a bull market. A significantly higher trough is unlikely, but would be a bearish sign.

ASX 200

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