- USD/RUB fades the previous day’s bounce off the lowest level since 2018.
- Central Bank of Russia tames uncontrolled run-up of the ruble as it surges to multi-month high.
- Risk-on mood drowns the US dollar, adding strength to the bearish bias for quote.
USD/RUB remains pressured for the fourth consecutive day around the 60.00 threshold, reversing the corrective pullback from the lowest level since 2018, heading into Monday’s European session.
The Russian ruble (RUB) pair refreshed its multi-year low the previous day as recovery in oil prices join a broad US dollar pullback amid cautious optimism in the markets. Also exerting downside pressure on the USD/RUB prices is Moscow’s recent policy of taking payments in ruble, which Germany also had to approve until finding any other solutions to the bloc’s geopolitical problems.
Recently, Reuters came out with the headlines quoting the Vedomosti daily as it cited two sources close to the government and one source close to the central bank. “The central bank buys foreign currency from export-focused companies through intermediaries, the sources said without disclosing details of the purchasing mechanism,” adds the news.
On the other hand, hopes that China will gradually overcome the covid-led challenges to the economic slowdown underpin the risk-on mood, as well as favor oil prices. Also keeping the US dollar on the back foot is the repetitive Fedspeak conveying 50 bps of rate hikes in the next few meetings.
Amid these plays, the US Dollar Index (DXY) renews a two-week low of around 102.55 while the S&P 500 Futures rise over 1.0% to 3,946 at the latest. Also portraying the risk-on mood is the US 10-year Treasury yields, up 4.8 basis points (bps) to 2.83% by the press time.
It’s worth noting that US President Joe Biden’s fresh push to the Sino-American tussles, during his visit to Japan, joins Ukraine’s rejection of ceasefire and any concession to Russia to keep the USD/RUB buyers hopeful.
Other than the risk catalysts, monthly PMIs, the Fed’s preferred inflation gauge, namely the US core PCE price index for April, as well as the Minutes of the latest Federal Open Market Committee (FOMC), will be crucial for the short-term USD/RUB directions.
Technical analysis
A downward sloping support line from late March, around $55.90 by the press time, offers intermediate bounces to the USD/RUB prices. The recovery moves, however, remain elusive until the quote stays below the 200-DMA level of 78.30 at the latest.
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