28.10. 2019: RUB retains momentum for growth (Brent, USD/RUB)

28.10. 2019: RUB retains momentum for growth (Brent, USD/RUB)


Brent oil prices fell on Monday after a rapid rally last week. Assets of emerging markets extend gains amid rising optimism on trade negotiations. China reported that the draft version of the phase-one trade deal with the US is close to finalizing. Market participants have changed their attitude wards the US-China trade deal as the negotiations progress. Traders are increasing long positions on oil as cautious sentiment fades away. US Trade representative Robert Lighthizer announced earlier that the parties were close to finalizing some sections of an interim agreement. Beijing has confirmed the statement. Oil markets are also supported by the news coming from the US. The world’s third largest oil and gas company, Baker Hughes, has released a report on a decreased number of active oil rigs in the United States. According to the published data, the number of drilling rigs has dropped to a minimum since April 2017. Since the beginning of the year, the number of active rigs has decreased by more than 21%. Meanwhile, the Brent quotes managed to settle lightly higher above the level of 62 dollars a barrel. The price has hit this level for the first time since September 25. In the past week, Brent oil has gained 4,4%. Today, Brent price has marginally declined reaching 61 dollars 87 cents per barrel. The ruble has opened the session trading in the red zone despite some gains last week. The Russian currency stayed firm amid the interest rate cut introduced by the Bank of Russia. Investors have already took into account the Bank’s decision. However, market participants were most interested in the regulator’s further actions. Since the Bank of Russia gave a hint that it was going to continue a rate cut during the next meetings, traders started to buy the ruble. The Russian currency has other obvious reasons for growth. For instance, the tax period in the country is still on, the stock market is extending, and the oil is trading high. Nevertheless, today the ruble fell slightly against the dollar and is trading at 63 dollars 88 cents. The pair is expected to trade mixed during the day. In the short term, the US Federal Reserve decision on the rate cut and the results of trade negotiations between the US and China will have a significant impact on the markets. The US dollar may appreciate slightly in case the Fed does not change its monetary policy. The outcomes of the trade negotiations between should boost the risk appetite. Investors are still waiting for a more visible progress on the US-China trade deal, namely the signing of the final agreement. However, positive news coming from the both parties also provide support for the market.

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