- USD/RUB fades yesterday’s advance and tests the 62.75 area.
- Russian Industrial Production expanded 3.3% YoY in June.
- Higher Brent prices lend support to RUB.
The Russian currency has resumed the upside today and is now forcing USD/RUB to trade in the lower end of the daily range around 62.75.
USD/RUB focused on data
The upbeat momentum around the Russian currency remains unchanged, with spot navigating at shouting distance from the area of yearly lows near 62.50.
RUB is deriving extra support today from the better tone in prices of the European reference Brent crude, up nearly 1% in the $65.00 area per barrel.
In addition, and also supporting RUB, Industrial Production expanded at an annualized 3.3% during last month, while Producer Prices contracted 0.6% inter-month in June and rose 4.1% from a year earlier, markedly lower than May’s readings.
Earlier in the day, the Ministry of Finance sold RUB 10.19 billion in OFZ bonds due in April 30 vs. a total demand for RUB 26.9 billion.
Later in the day, Retail Sales are due along with the Unemployment Rate and monthly GDP figures. In the US calendar, Housing Starts and Building Permits are due along with the EIA weekly report on US crude oil stockpiles and the Fed’s Beige Book.
What to look for around RUB
Declining inflation appears supportive of the easing cycle already triggered by the central bank, while Governor Nabiulina expects the economy to reach neutral rates at some point in mid-2020. Furthermore, healthy economic fundamentals and the increasing demand for domestic debt (OFZ) have been sustaining the rising appetite for Russian assets. Additionally, RUB derives extra buying interest from the carry-trade, expected higher oil prices, record-high speculative positioning and diminishing chances of US sanctions against the country.
USD/RUB levels to watch
At the moment the pair is receding 0.36% at 62.77 and a breach of 62.56 (monthly low Jul.16) would open the door for 62.49 (2019 low Jun.25) and finally 61.63 (monthly low Jul.11 2018). On the upside, the next barrier emerges at 63.16 (21-day SMA) seconded by 63.99 (high Jul.8) and then 64.02 (55-day SMA).