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USD/RUB Gaps Higher as Risk-Off Hits EMFX, Oil Takes Out July Lows

RUSSIA
  • USD/RUB opens +0.36% higher this morning on the back of early BBDXY strength and a ~2.15% sell-off in oil markets. Brent remains technically weak after breaking the July 20 low at $66.91, opening up $65.00 to the downside.
  • Moreover, a surprise EIA inventory build at +696k vs -1.79m exp did little to support the weakening demand outlook.
  • PPI & Weekly CPI data came out flat to lower vs previous metrics but printed slightly above expectations yesterday – resulting in a +5bp uptick in 3x6 FRA-Mosprime spreads (now +35bp).
  • While this supports CBR forecasts for moderating inflation, its not quite the levels the market was expecting – which will likely keep markets cautious in calling the decline too early.
  • Price action will remain volatile today as markets digest a potentially expedited taper timeline from the FOMC minutes – retaining a bias for USD strength in the near-term.
  • USD/RUB has moved through its 100dma, and may run into resistance around the 200dma at 74.3797.
  • Intraday Sup1: 73.9435, Sup2: 73.7458, Res1: 74.2486, Res2: 74.3985
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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