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Hawkish CBR & Subsiding Geopolitical Risks Boost RUB Bulls

RUSSIA
  • USD/RUB continues to plumb lower at the open, despite early weakness in oil markets.
  • Unwinding geopolitical tensions, combined with a more hawkish CBR, should support the RUB on higher vol-adjusted carry in the near-term with price action having closed below the 200dma in Friday's session.
  • Key takeways from the CBR were that the MPC remains concerned about spiralling inflation, driven primarily by unanchored expectations and stronger than expected demand /recovery potential.
  • This informed the reason to accelerate tightening with front-loaded hikes to avoid being behind the curve.
  • Nabiullina also stressed a pipeline of possibly 2 more +25bp hikes in June/July (terminal rate ~5.5%) in the CBR's new forward guidance model, but did not discount the possibility of larger hikes.
  • Oil markets remain under pressure as virus conditions in India & Japan dampen demand and markets anticipate an OPEC+ output hike from May.
  • Analysts note risks are to the downside and may see the $60 handle tested in Brent, if conditions do not improve.
  • Limited data on the agenda leaves geopolitical developments & the FOMC in the driver's seat this week.
  • Intraday Sup1: 74.5050, Sup2: 74.1981, Res1: 73.8347, Res2: 75.0980
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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