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Free AccessGeopolitics, Oil Weakness Hurt RUB Ahead of Today's CBR
- USD/RUB opens lower in line with a softer greenback and modest losses in oil markets, having suffered a sustained melt higher yesterday.
- Geopolitical concerns and weaker oil markets scuppered a breakout below 72.6566 this week and may keep the cross trading choppily in the coming weeks as more US, UK & EU sanctions filter through.
- Today's focus is on the CBR, however, expected to hold one last time before initiating a hiking cycle to quell a bout of acute CPI overshooting. Continued upside in PPI and w/w CPI places the balance of risks to the upside for a surprise 25bp hike in today's meeting – but our base case remains for a hold.
- 6m Mosprime vs 6x9 FRA spreads indicating ~124bp of hikes in the pipeline, which seems overkill given substantial 2H21 disinflationary factors.
- We see 50-75bp as more expedient (4.75-5.00 2021 terminal rate), with potential to reach the middle of the neutral rate zone (5.5%) by end 2022.
- RUB will likely gain some support from hawkish guidance from Nabiullina towards an expedited hiking cycle – tone and phrasing to be watched closely.
- Intraday sup1: 74.0616, Sup2: 73.5599, Res1: 74.4040, Res2: 74.5050
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.