Russian Ruble stays depressed below 94.00 despite US Dollar retreat, focus on yields

Russian Ruble reverses the CBR-induced gains despite US Dollar’s pullback.
Sour sentiment, downbeat Oil price and geopolitical fears underpin bullish bias about USD/RUB pair.
Upbeat US Treasury bond yields also exert downside pressure on Russian Ruble.
Mid-tier US data, Fed talks eyed ahead of Jackson Hole speeches for clear directions.

Anil Panchal FXStreet

Russian Ruble (USD/RUB) price prints mild gains around 93.80 even as US Dollar struggles heading into Tuesday’s European session. In doing so, the Russian currency (RUB) drops for the second consecutive day while reversing the last week’s gains, mainly backed by the Central Bank of Russian Federation’s (CBR) surprise rate hike. It should be noted that the pair’s firmer performance suggests the market’s less confidence in the Ruble than the US Dollar, especially amid the ongoing geopolitical tussles with Ukraine and a recent pullback in the Oil price.

Russian Ruble loses investor confidence

Russian Ruble’s inability to cheer the US Dollar’s retreat suggests the trader’s fears of more economic hardships for the Oil-rich nation, mainly due to the higher inflation and the CBR’s failure to defend the currency despite a heavy rate hike.

On the other hand, US Dollar Index (DXY) renews its intraday low near 103.20, down for the second consecutive day, as market players brace for Friday’s speech for Fed Chair Jerome Powell at the Kansas Fed’s annual event called at the Jackson Hole Symposium. On the other hand, the WTI crude oil also prints a two-day losing streak while declining to $80.00 at the latest.

It’s worth noting that the market’s indecision about the Fed’s future moves, especially after the last weekly impressive US data, joins China woes and expectations suggesting higher US wage growth in the future, per the latest survey of the Federal Reserve Bank of New York, also underpin the USD/RUB upside momentum.

Against this backdrop, the US 10-year Treasury bond yields refreshed the highest level since November 2007 earlier in the day to 4.36% before easing to 4.34% at the latest. That said, the S&P500 Futures print mild losses to reverse the previous recovery from the nine-week low.

Looking ahead, US housing numbers and the mid-tier Fed policymakers’ speeches will be crucial for the Russian Ruble traders. Above all, Friday’s Fed Chair Jerome Powell’s speech at the Jackson Symposium appears the key to clear directions.

Russian Ruble Technical Analysis

Russian Ruble struggles to extend the corrective bounce off 200-SMA, around 92.90 by the press time, toward the previous support line stretched from late May, close to the 95.00 round figure. Also challenging the short-term USD/RUB rebound is the 100-SMA hurdle of around 95.20.

Meanwhile, a sustained downside break of 200-SMA surrounding 92.90 needs validation from the 90.00 round figure and multiple lows marked since early July near 89.00.

It should be noted that the latest rebound in the RSI and the MACD indicators also keep the Russian Ruble buyers hopeful.

Russian Rule: Four-hour chart

Trend: Further upside expected

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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