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Oil Buoyed By Attempted Houthi Drone Bombing; CBR Hikes Seen in 1Q22

RUSSIA
  • USD/RUB opens lower on a softer dollar and buoyant oil prices trading +1.51% higher at a new 13-month high above $63/bbl.
  • Brent was driven higher by accentuated middle east tensions after an explosive-laden drone from Houthi Rebels was destroyed en route to the Saudi Kingdom.
  • US stimulus expectation and a softer dollar also providing support to both oil futures and broad-based risk-on.
  • USD/RUB pared Friday's gains, as expected, after Lavrov's comments about "breaking ties with the EU" on harsh sanctions were overblow, providing an excellent opportunity to fade the rally from its 74.46 peak.
  • RUB remains the bright spot in EM for now following last week's CBR where Nabiullina signalled the end of the easing cycle in an expectedly hawkish presser, but fell short of signalling hikes in 2021.
  • Interestingly, the CPI spike and avg CPI expectations for 2021 were raised to 5.5% peak in march and 3.7-4.2% by end 2021, but were labelled as "balanced" and expected to recede by 2H21.
  • Hiking expectations have been brought forward by most of the sell-side to 1Q22. Focus today on industrial production data exp at 0.1% vs -0.2% prior. Sup1: 73.1160, Sup2: 72.8237, Res1: 73.6452, Res2: 73.9016
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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