Happy Friday, traders! Are you ready to trade at the end of the week? Here’s what you need to know before you start:
All eyes on USD/RUB ahead of the CBR interest rate decision
The Central Bank of Russia makes an interest rate decision today at 13:30 MT time. Analysts expect the regulator to raise its interest rate from 5% to 5.5%. After the announcement, the Central Bank of Russia holds an online press conference with its Governor Elvira Nabiullina.
Why is it important?
There are a lot of events that are driving the Russian currency these days. First of all, US President Joe Biden and Russian President Vladimir Putin have finally set their meeting date for June 16. The sides plan to find common grounds after the new round of sanctions. For instance, one of the US bans blocked US banks from buying OFZ government bonds directly from Russia since mid-June.
Another factor that is pushing the RUB higher is rising inflation figures. In May, consumer prices jumped 6%, faster than the market expectations of +5.8%. That's why the bank's intervention is required to hold inflation within its target level.
Finally, the Russian ruble is a commodity currency, so the optimism in the oil market is supporting it. Given all the factors mentioned above, the bank may boost its rate and make the RUB more attractive for carry-trade operations (when investors convert lower-yield currencies into rubles to buy bonds with high-yields).
Take a look at USD/RUB
The pair has fallen to the lowest level since July 2020. A strong support level is placed quite far from the current price (at 70.60), so we may expect a further slide after the rate hike is confirmed. On the upside, the resistance levels are placed at 72 and 72.70.
The first week of November promises to be eventful, as we have the Fed meeting, the BOE update, and the NFP release. Read more details here.
Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.