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USD/RUB Gaps Higher as OPEC+ Supply Deal Weighs on Crude, Hawkish CBR Eyed

RUSSIA
  • USD/RUB opens sharply higher this morning, reaching 74.40 after OPEC+ approved new production baselines and extended the deal to 2022 on Sunday.
  • Sources say issues between Saudi and the UAE have been ironed out – giving markets confidence that a messy break-up and opening of the production floodgates was not on the cards.
  • However, increased supply does mean downside in the near-term. Goldman Sachs said it remains committed to its $80/bbl target and revised its 2022 avg price to $75.
  • This week the focus is on the CBR, which is expected to deliver a hike in the 75-100bp area amid concerns of acute overshooting pressure in CPI.
  • PPI moderated slightly in June at 31.1%, but printed well above expectations for 29.3% on Friday.
  • 3x6 FRA spreads pricing in +105bp in hikes over 3-6 month horizon and were unmoved by PPI readings.
  • At these levels, and around 75.00, markets may look to fade moves higher in USD/RUB towards Friday's meeting, provided geopolitical risks remain muted.
  • The covid situation also seems to be seeing a tentative peak with incidence rates declining, but will need more confirmation in the coming day/weeks.
  • Intraday Sup1: 74.2486, Sup2: 74.0828, Res1: 74.4614, Res2: 74.8061
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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