08.11.2019:  RUB to end week lower (Brent, USD/RUB)

08.11.2019: RUB to end week lower (Brent, USD/RUB)

Oil prices moved lower after gaining ground yesterday. With a huge 1.40% gain in the New York trade, Brent crude jumped to a six-week high. A visible progress in the US-China trade deal has positively influenced the Russian currency. However, during early session today, both the ruble and the oil were trading in the negative territory. Today, fundamental factors are more favourable for the oil than two weeks ago. The news that the US and China have agreed to cancel additional tariffs in phases lifted the traders’ sentiment. Although the exact venue for the official signing of the phase-one agreement has not been chosen yet, market participants expect the meeting to take place in November. White House senior adviser Kellyanne Conway announced yesterday that Donald Trump was ready to sign the deal. At the same time, White House trade advisor Peter Navarro said that until now no agreement on reducing or cancelling tariffs had been reached. He stresses that negotiations are still in progress. As previous experience shows it, the course of trade negotiations can change rapidly, what brings instability to the market. In the short-term, the oil is very likely to decline. Early in the today’s session, the prices started to move lower. Brent oil was last seen trading at 61 dollars 82 cents. Some other political factors can also weigh on oil prices. For instance, OPEC and allies are going to meet in December. However, it is reported that members of OPEC are not going to discuss more significant cuts in oil output what adds to the negative sentiment of oil traders. Today, the Russian currency is retreating against the US dollar. The dollar/ruble pair is currently trading at 63.65 with a possibility of an upward correction. Despite a slight decline, the ruble is still trading steadily high. Yesterday’s surge can be explained by the positive dynamics in the global financial markets, attributed to a progress in trade deal. News from the Western media has created additional
background for strengthening the ruble. It is reported that the Russian Ministry of
Finance plans to radically change the structure of the Russian National Wealth Fund. In particular, the share of the US dollar assets will be significantly reduced. Market participants in Russia are waiting for more clues from the Central Bank about further monetary policy. According to Elvira Nabiullina, the regulator sees the need to cut the key rate. This measure is believed to support the demand for Russian assets. In October, the share of non-residents in federal loan bonds has increased significantly. This shows a stable interest in Russian assets and provides support to the ruble. The ruble has moved away from the critical resistance level and is trading near the level of 64 against the US dollar. It is expected to trade around the mark of 63 until Monday. Meanwhile, the oil is likely to rise during the American session.

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