Russia: CBR to start easing – TDS

Sandeep Kanihama FXStreet Contributor

Paul Fage, senior emerging markets strategist at TD Securities, expects the CBR to start a shallow easing cycle on Friday, and cut by 25bps.

Key Quotes

“We've held this view since end of April. The consensus is also almost unanimously leaning towards easing.”

“At the last Board meeting, on 26 April, the press statement held out the prospect of imminent rate cuts saying that "if the situation develops in line with the baseline forecast, the Bank of Russia admits the possibility of turning to cutting the key rate in Q2-Q3 2019".”

“Since then, inflation developments have been generally positive. CPI inflation in May was 5.1% y/y, down from 5.2% in April and further supporting the CBR's view that March's reading of 5.3% will be the peak for this year. Core inflation has edged up, to 4.7% in May from 4.6% in April, but is running a fair bit below headline. Since the April meeting USDRUB is almost unchanged, in spite of a fall in global oil prices. Added to all this the global financial environment has taken a distinctly more dovish tone.”

“So we see nothing in the way of the CBR cutting the policy rate by 25bps on Friday. We've held this view since the 26th of April, and the consensus has almost unanimously aligned to our view now.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD climbs to daily highs on US CPI

EUR/USD now accelerates it rebound and flirts with the 1.1880 zone on Friday, or daily highs, all in response to renewed selling pressure on the US Dollar. In the meantime, US inflation figures showed the headline CPI rose less than expected in January, removing some tailwinds from the Greenback’s momentum.

GBP/USD clings to gains above 1.3600

GBP/USD reverses three consecutive daily pullbacks on Friday, hovering around the low-1.3600s on the back of the vacillating performance of the Greenback in the wake of the release of US CPI prints in January. Earlier in the day, the BoE’s Pill suggested that UK inflation could settle around 2.5%, above the bank’s goal.

Gold: Upside remains capped by $5,000

Gold is reclaiming part of the ground lost on Wednesday’s marked retracement, as bargain-hunters seem to have stepped in. The precious metal’s upside, however, appears limited amid the slightly better tone in the US Dollar after US inflation data saw the CPI rise less than estimated at the beginning of the year.