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  • USD/RUB challenges August’s peak above 67.00.
  • Brent crude down more than 2% weighs on RUB.
  • Russia CPI next on tap on Friday.

The Russian Ruble has resumed the downside today and is now lifting USD/RUB to fresh tops beyond 67.00 the figure.

USD/RUB focused on oil, trade

RUB remains offered since late Jul, when it was trading around 62.50 vs. the Greenback in a context favourable to the EM FX space.

However, declining crude oil prices, US sanctions (albeit ‘lighter’ than initially expected) and rising concerns on the US-China trade front have not only undermined further RUB strength but also sparked a sell off in the EM space, leaving the currency exposed to extra losses.

In the data space, Russia’s manufacturing PMI eased a tad to 49.1 in August (from 49.3), while Services PMI is due tomorrow ahead of key inflation figures tracked by the CPI and CBR FX Reserves due on Thursday.

What to look for around RUB

Declining inflation and growth running below the expected path appears supportive of the easing cycle already triggered by the CBR in previous meetings. In addition, Governor E.Nabiulina expects the economy to reach neutral rates at some point in mid-2020 and inflation to hit the bank’s 4% target early next year. However, trade concerns emerge as a serious threat to both the Russian economy and the Ruble despite healthy fundamentals overall, increasing demand for domestic debt (OFZ) and demand for carry-trade, all RUB-supportive.

USD/RUB levels to watch

At the moment the pair is gaining 0.32% at 66.98 and faces the next up barrier at 67.10 (monthly high Aug.20) seconded by 67.16 (monthly high Feb.14) and then 69.81 (2019 high Jan.2). On the other hand, a breach of 66.23 (21-day SMA) would open the door to 65.44 (low Aug.22) and finally 64.93 (200-day SMA).