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USD/RUB Momentum Stalls as Softer China Activity Hits Brent

RUSSIA
  • USD/RUB opens +0.20% higher this morning, driven primarily by weakness in oil markets.
  • Softer Chinese activity data, coupled with concerns about the spread of the delta variant, dragged Brent >2% lower in early trading – injecting more volatility into USD/RUB at the start of the week.
  • USD/RUB traded in a broad range last week, retracing a move higher to 74.14 to end the week -0.32%. With CPI showing tentative signs of moderation, focus will shift to PPI data due this week for more cues regarding moderating price pressures (in line with CBR forecasts).
  • More signs of lower inflationary pressures will likely buoy demand for RUB assets in the coming months as real yield/carry differentials widen – provided global risk sentiment remains favourable.
  • Alongside PPI, the FOMC minutes and UNSC discussions on Afghanistan will be eyed closely as regional instability/uncertainty increases with Taliban occupation of Kabul.
  • USD/RUB price action has returned above the 50dma (73.3224) on oil weakness, but RUB bulls will be looking for a close below 73.00 this week for further downside in the cross towards August and June lows.
  • Intraday Sup1: 73.2003, Sup2: 73.0263, Res1: 73,4728, Res2: 73.6455
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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