USD/RUB gains traction above the 97.00 area, investors await US economic data

USD/RUB gains momentum and trades in positive territory for the third consecutive week during the early European session on Monday. The pair currently trades near 97.23, up 0.37% for the day.

The economic data released last week revealed that Russia's S&P Global Manufacturing PMI for August came in at 52.7 compared to the market estimate of 52.1. The figure rose to its highest level in three months. The Unemployment Rate for July declined to a new all-time low of 3.0% from 3.1% in June and the 3.2% market expectation.

The Russian Ruble has been falling sharply in recent months and Russia's budget is under pressure as a result of the Ukraine conflict. The Bank of Russia increased the interest rate by 350 basis points (bps) to reach 12% on August 15 to stop the depreciation of the Ruble. Apart from this, Russia has increased its military spending objective for 2023 to more than $100 billion, representing a third of all state expenditure, as the escalating costs of the Ukraine conflict place an increasing strain on Moscow's finances.

Nonetheless, Russian Finance Minister Anton Siluanov forecasts that the Russian economy will expand by at least 2.5% in 2023, with inflation hovering around 6%. He also said that he will collaborate with the Central Bank to take all necessary steps to bring down inflation to a sustainable level.

On the US Dollar docket, Market players speculate on a less aggressive Federal Reserve (Fed) stance following the mixed economic data results last week. The possibility of holding an interest rate at the September meeting remains at 93%, according to the CME FedWatch Tool. Meanwhile, the odds of hiking rates at the November meeting are about 38%. That said, Fed Chairman Jerome Powell stated at the Jackson Hole Symposium that a potential additional rate hike would be depending on incoming data.

Looking ahead, market participants will focus on the US Factory Orders due later on Tuesday and then shift their focus to the US ISM Services PMI data on Wednesday. These figures could give a clear direction for USD/RUB. Also, the headline surrounding Russia’s war in Ukraine remains in focus.