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RUB Underperforms EM Peers As Sanctions Uncertainty Weighs

RUSSIA
  • USD/RUB opens higher this morning, underperforming EM high yield peers most likely on uncertainty surrounding US sanctions and weakness in oil markets.
  • Brent has continued to pull back on a firmer dollar and expectations for ~1.5m bbls/day of OPEC+ output to come back to market at this week's meeting (Thurs).
  • Brent is now trading below $63/bbl after peaking around $67/bbl last week and may continue to slide if Chinese demand data remains on a weakening trend.
  • USD/RUB is trading a broad range between 73.50-75.00, tracking broad risk sentiment and commodity prices.
  • US sanctions today will be interesting to monitor for broadness in scope, given the expanded mandate to include hacking incidents.
  • Initial upside pressure may prevail in the pair following headlines, but will subside sharply if the sanctions fall short of causing material damage to the economy.
  • Asset freezes and travel bans of Kremlin officials have seen limited marginal impact to date, but some are concerned more limitations may be imposed on OFZ markets.
  • Intraday Sup1: 74.5050, Sup2: 74.1611, Res1: 74.7567, 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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