- RUB extends gains for yet another session.
- USD/RUB comes down from recent tops near 65.80.
- US Factory Orders, Fedspeak next of note for the buck.
The Russian Ruble is extending the optimism in the first half of the week, forcing USD/RUB to print new multi-day lows in the boundaries of 65.00 the figure earlier in the session.
USD/RUB looks to trade, risk appetite
Spot is down for the third session in a row on Tuesday following the renewed offered bias hitting the buck and the consequent support to RUB coming from the EM space despite rising tensions on the trade front.
RUB keeps the bid tone intact in the meantime, and managed to leave behind Monday’s lower-than-expected manufacturing PMI for the month of May at 49.8, slipping back into the contraction territory for the first time since August 2018.
Later in the week in the Russian docket, services PMI is due tomorrow followed by inflation figures and the usual weekly report on FX reserves held by the CBR on Thursday.
What to look for around RUB
The upcoming release of inflation figures has shifted the attention back to the CBR and the likeliness of rate cuts at some point later in the year. In fact, the ongoing down trend in inflation plus healthy economic fundamentals could motivate the central bank to restart its easing cycle as early as Q3/Q4 2019, according to the latest statement from the central bank. In the meantime, rising appetite for Russian assets, carry-trade, expected higher oil prices, record-high speculative positioning and diminishing chances of sanctions are all sustaining the positive prospects around RUB.
USD/RUB levels to watch
At the moment the pair is retreating 0.16% at 65.24 and a breakdown of 65.08 (low Jun.4) would aim for 64.76 (55-day SMA) and finally 64.15 (monthly low May 22). On the other hand, the next hurdle is located at 65.78 (high Jun.3) seconded by 65.87 (200-day SMA) and then 66.55 (monthly high Mar.8).
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