USD/RUB remained just below its yesterday

USD/RUB

The dollar traded mixed against its G10 peers during the European morning Wednesday. It was higher against NOK, EUR and CHF, in that order, while it was lower against AUD, NZD and SEK. The greenback was virtually unchanged against GBP, JPY and CAD.

The euro fell against the dollar after manufacturing growth in the Eurozone slowed further in September. The final German manufacturing PMI contracted for the first time since June 2013. The poor data confirm that the bloc’s manufacturing economy has lost the growth momentum seen earlier in the year. On top of the slowdown in inflation rate, the weak manufacturing data trigger concerns of stagnation and added further selling pressure on euro.

The Norwegian krone was another loser against the greenback after that country’s manufacturing PMI missed expectations of a moderate decline and fell again below the 50 line. USD/NOK rose to trade a few pips below our 6.4600 resistance level. However, given the Norges Bank’s announcement yesterday that it would begin buying the equivalent of NOK 250mn per day from this month, I would remain cautiously bearish towards USD/NOK as this move by the Bank is NOK-supportive in the near term.

On the other hand, Sweden’s manufacturing PMI improved in September from its lowest point last seen in April 2013. This is the second major indicator that comes strong from the country, following the general elections in September. Nevertheless, I would remain cautious on SEK. I expect the industrial production figure to be released on Friday and the CPI in two weeks to give a better view on the country’s conditions.

The Russian ruble hit a new low vs the dollar yesterday after speculation emerged that the country’s central bank is considering introducing temporary capital controls. The pair remained at high levels today even though the Bank issued a statement assuring no limitations on capital flows will be imposed.

USD/RUB remained just below its yesterday’s all-time high 39.860 (R1) level and traded near those levels during the European morning Wednesday. After the completion of a triangle formation, the price structure remains higher highs and higher lows above both the 50- and the 200-period moving averages and this keeps the overall outlook to the upside. The MACD, already within its positive field, lies above its trigger line, while the RSI remains above 70 and is pointing slightly up. This indicates accelerating bullish momentum. I would like to see a decisive move above the psychological level of 40.000 (R2) for further bullish extensions.

• Support: 39.265 (S1), 38.670 (S2), 38.000 (S3) .

• Resistance: 39.860 (R1), since the pair is printing new all-time highs, no resistance is identified from past market activity. A possible second resistance stands at the psychological level of 40.000.