Intraday Analysis from FXMarketAlerts.com
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The ruble is modestly weaker against the basket amid rebound in EUR/RUB driven by advance in EUR/USD on the back of encouraging news regarding Greece which is expected to reveal details on the austerity package. At the same time USD/RUB is edging modestly lower, but downside momentum is not strong and 29.800
keeps to doors to lower levels closed. While at this stage the 34.650 intervention mark in basket terms is not under pressure the ruble has still potential to extend gains as upside should prove limited for EUR/USD and we see current squeeze in EUR/RUB as an opportunity to sell (gains should be capped below 40.85/90) and the bias in case of USD/RUB is still skewed to the downside (a break below the 100-dma 29.68 still possible)
amid stable crude oil prices with scope to firm beyond $80 and recent breakout in S&P500 above the 1113 encouraging signal for
risk taking. Few things worth mentioning with newswires reporting that the CBR hinted that it its report published earlier this week that it may introduce new measures to stem pressure on the ruble from hot money and could raise capital reserve requirements for banks on foreign currency deposits and liabilities to non-residents. While a kind of soft measures to stem pressure on the ruble cannot be excluded, one should not expect anything drastic as the CBR stressed that a return to capital controls is not taken under consideration.
CBR First Chairman Deputy Ulyukayev sounds very upbeat about prospects for the Russian economy expecting fairly robust GDP growth of 4.5% this year. At this stage we are still cautiously optimistic expecting the economy to expand 3.5% this year. While the economy is in recovery mode, there is still risk that it could run out of steam in the second half of the year unless domestic demand picks up, which seems unlikely amid rising unemployment.
Piotr Matys
