Russia joined a growing pack of emerging-market nations lowering interest rates and signaled more reductions to come, boosting bonds and the ruble and leaving traders to guess the timing of its next cut.
The first reduction in more than a year had been expected and strategists said Bank of Russia’s dovish tone was justified given weak growth and slowing in inflation, meaning further cuts wouldn’t hurt the world’s best-performing currency this year. With the Federal Reserve predicted to lower rates in the U.S., Russia’s carry-trade appeal should endure, ensuring further flows into the nation’s bonds.
Piotr Matys, currency strategist at Rabobank in London
“Nabiullina has been unusually very explicit by saying that two more rate cuts are possible in the second half of the year. Lowering interest rates gradually by the Bank of Russia should not hurt the ruble significantly after major central banks turned decisively dovish and the Fed is expected to cut rates. Even if the Bank of Russia cuts on two more occasions this year, the ruble will remain one of the highest-yielding emerging-market currencies.”
So where is the Ruble headed, relative to the US dollar, lets go to the chart to find out?
Monthly Chart (Curve Timeframe) – monthly supply is at 78.000 and monthly demand is at 56.000.
Weekly Chart (Trend Timeframe) – the trend is sideways.
Daily Chart (Entry) – no trade set-ups at the moment. The chart suggest to wait for price to break out of the range highlighted in white.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
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