16.01.2020: RUB holds firm; Oil likely to reverse (Brent, USD/RUB)

16.01.2020: RUB holds firm; Oil likely to reverse (Brent, USD/RUB)


Benchmark oil futures are gaining ground in the early trade. Oil prices have recovered after slipping to five-week lows on news about the signing of the phase one trade deal between the US and China. The ruble is trading steadily high as political changes in Russia did not impress investors. The long-anticipated trade agreement has finally been signed but mostly on conditions dictated by the US. However, this kind of a deal is better than the trade war. The markets’ reaction was rather sluggish maybe because traders have already priced in this important event. In addition, the entire Russian government has unexpectedly resigned together with the Prime Minister. There were also reports about referendum on constitutional amendments scheduled for September. This political turmoil and uncertainty around it will certainly affect the oil market In general, formal signing of the initial
trade agreement has boosted markets’ sentiment. Oil opened the day trading slightly higher
and then gained momentum later in the session. Brent crude rose by more than 1% and was trading at 64 dollars 72 cents a barrel. Likewise, West Texas Intermediate was extending gains and has settled at 58 dollars 30 cents per barrel. Yesterday, oil was following the downward trend. However, Brent quotes did not manage to stay below the level of $64 per barrel after the release of the industrial data. US crude inventories went down by 2.5 million barrels which is five times more than expected. Currently, Brent is very likely to settle at the levels of 64 and 65 dollars per barrel. The ruble didn’t show any strong reaction to the resignation of the Russian government. On Wednesday, the dollar/ruble pair closed the session without any considerable changes. The pair opened today’s session rising by 0.29%. There are no obvious risks for the ruble right now. Besides, the upcoming tax payment period in Russia may support the national currency. The dollar/ruble pair is expected to test the level of 61. Despite the lack of any positive surprises in the US-China trade deal, the ruble managed to hold near the mark of 61. During the day, the ruble may be influenced by the internal news about the appointment of new head of the Russian government and the formation of the Cabinet. In the short-term, the policy of the Federal reserve on maintaining liquidity for risk assets will continue to provide support for the Russian currency.

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