USD/RUB within a tight range above 66.00
|- The Russian currency extends the sideline theme above 66.00.
- RUB appears decoupled from Brent dynamics.
- Russian Retail Sales, GDP figures due later in the week.
USD/RUB is prolonging the sideline theme so far this week around the 66.00 handle, where also coincides the critical 200-day SMA.
USD/RUB looks to data, risk trends
Spot keeps navigating without a clear direction in the first half of the week despite crude oil prices met some selling pressure after recording fresh YTD tops beyond the $66.00 mark on Monday.
RUB keeps following the mood in the EM FX space as a main driver for near term direction, while at the same time closely following the developments from the US-China trade negotiations in Washington and the fresh trade effervescence between the US and the EU.
Later in the week, key Russian GDP figures are due along with Retail Sales, unemployment figures and the weekly report of FX reserves held by the CBR.
Latest news around RUB noted credit rating agency Moodys upgraded Russia to Baa3, joining its peers S&P and Fitch.
What to look for around RUB
The CBR left its monetary conditions unchanged at its latest meeting, adding that inflationary risks keep pointing to the upside in response to the recent increase in the VAT and the depreciation of RUB in H2 2018. The central bank sees inflation picking up pace in the next months, although consumer prices should drift to the bank’s 4% target at some point in H1 2020. That said, the tightening cycle remains well in place despite the current ‘pause-mode’. Furthermore, the carry-trade should be supportive of the domestic currency along with projected higher oil prices. On the negative side, the spectre of further sanctions on Russian citizens or the economy as well as geopolitical jitters carries the potential to undermine the momentum in RUB.
USD/RUB levels to watch
At the moment the pair is retreating 0.07% at 66.16 and a breakdown of 66.05 (10-day SMA) would expose 65.87 (21-day SMA) and finally 65.16 (2019 low Jan.31). On the other hand, the next hurdle lines up at 66.71 (100-day SMA) followed by 66.92 (55-day SMA) and then 67.16 (high Feb.14).
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