The ruble was basically unchanged in a slow day of trading today with the USA and UK on holiday. Russia’s currency has essentially balanced fundamentals: shares made new highs but oil declined sharply at the end of last week. Russian data was mostly unremarkable.
Dollar-ruble has held within the area of ₽64.44 so far today with almost no movement in either direction. There has been some recovery in May overall from last month’s low of ₽63.65, but there appears to be little impetus for any large move higher by USDRUB.
One of the ruble’s most important fundamental drivers is the price of crude oil. Russia is the world’s second biggest producer of oil (based on 2019 estimates), so this commodity’s volatility often affects RUB. Last week featured oil’s biggest string of losses since summer 2018, which was a factor against Russia’s economy and currency.
Conversely, shares have given the ruble a boost recently. Moscow’s stock exchange has been open as usual today, and the MOEX Russia Index made a small gain to 2,627. This is only very slightly short of the index’s all-time high at 2,645 last Wednesday.
Russian shares are important for ruble traders for both direct and indirect reasons. Higher prices spur demand for rubles to buy shares directly, and indirectly some of the largest market caps are those of big energy companies. Gains for these shares are a fairly good indication that investors as well as traders are positive about the Russian economy’s future prospects.
Aside from these two factors, there wasn’t much important news for the ruble last week. Ongoing jitters over trade wars in various markets haven’t been particularly important for USDRUB. This is because of a few main reasons, but the most important are demand among carry traders and Russia’s budget surplus. Besides, Russia is by no means in President Trump’s sights when it comes to hiking tariffs.
Friday’s data from Russia was generally unremarkable. Unemployment was stable at 4.7%, and annual growth in retail sales was very slightly disappointing at 1.2%. On the other hand, annual growth in Russia’s GDP accelerated slightly to 1.6%.
There isn’t much economic data due from Russia this week. The only Russian release that could have a noticeable effect on trading is on Friday at 13.00 GMT: annual money supply. The forecast here is slightly lower at 8.5% growth against the previous 8.9%. No major impact is likely unless the figure is very surprising.
Traders will probably look instead at oil and shares this week. The importance of these correlations can be greater when the economic calendar is fairly empty. However, preliminary American GDP for Q1 at 12.30 GMT on Thursday could be an important release. The consensus suggests a decline of 0.1% to 3.1%.
Overall, the ruble’s fundamentals are mixed. Despite reasonably strong data and rate differentials, RUB’s correlation with oil could mean some headwinds. Small ranging movements appear to be the most likely outcome until Thursday’s American GDP release.
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