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RUB Plays Catch-Up to EM Peers After Softer Start, Weekly CPI Eyed

RUSSIA
  • USD/RUB opens slightly higher this morning in line with a slightly firmer BBDXY, but is quickly playing catch-up to the likes of ZAR & TRY trading in the green.
  • Broad-based risk-on and sustained bullish momentum in oil markets drove USD/RUB lower in yesterday's session with a notable close above the $70 handle reinforcing near-term bullish conditions – despite a smaller than expected API inventories draw at 1.6m vs 2.7m exp.
  • On the data front, markets will eye weekly CPI data for signs of further moderation in price pressures in line with CBR forecasts for a cyclical peak which have been supporting more robust RUB & OFZ fundamentals in recent weeks.
  • 3x6 FRA-Mosprime spreads remain at +37bp, with markets anticipating one more hike in the pipeline for the CBR in September.
  • Putin seems to have stepped up efforts to garner support for United Russia ahead of Duma elections next month with a number of social packages and promises of action post-elections amid concerns of historically low support for the party.
  • Sell side remains constructive on RUB, but note risks of volatility surrounding Jackson hole.
  • Traders likely will be looking to fade RUB weakness towards the CBR.
  • Intraday Sup1: 73.5342, Sup2: 73.3934, Res1: 73.9435, Res2: 74.0828
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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