Confrontation between the US and China impact on the rouble stronger than oil

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Wednesday, July 11, at the end of the trading session on the Moscow exchange rate of the us dollar calculations “tomorrow” increased by 62 kopecks (+1,05%), to 62,35 Euro and by 27 kopecks (+0,37%), to 72.83 RUB Trading volume in the pair dollar/ruble amounted to $4.7 billion (+34.2 per cent), and Euro/ruble – 471,0 million euros (-5,64%).
The Bank of Russia from July 12 to set the official US dollar rate to ruble at the level of 62,4442 RUB below the previous close by 34.62 COP. the Official Euro to rouble was fixed at RUB 73,9365 compared to the previous value rate decreased by 49,90 COP.
The ruble has lost earned income for Tuesday against the U.S. dollar. The Euro’s losses were less due to the weakening of the single currency on the Forex market. Its weakening has contributed to a sharp decline in oil prices, as well as care of the risky asset in the escalation of the trade conflict between the US and China.
The price of Brent crude declined by 6.5%, to $73,03 per barrel. The drop in prices began in the Asian session and strengthened during the European trading session. Drop the cost to $77 per barrel was seen as a corrective movement to increase from $76,35 to $79,48. When the price falls below $77 per barrel joined the technical factor – triggered protective stops under the trendline.
The decline in oil prices has occurred despite the fact that the US Department of energy has announced the reduction of crude inventories in the week ended July 6. Last week the oil reserves decreased by 12.6 million barrels to 405,2 mln barrels (consensus was 4,489 million barrels), gasoline inventories – by 700 thousand barrels to 239 million barrels (consensus was -800 thousand barrels). Distillate inventories increased by 4.1 million barrels to 121,7 million barrels (consensus was 800 thousand barrels). Oil production in the USA remained at the level of 10.9 million barrels per day.
Falling prices could cause by two factors: first, the possible weakening of U.S. sanctions against Iranian oil exports, and secondly, the return of production and export of oil terminals in Libya to a normal level. News became a trigger to close long positions, and then worked the protective of the foot, which led to a sharp drop in prices.
As for the trade war, the United States and China, the President of the United States Donald trump instructed to begin the procedure of introducing an additional 10% duty on goods from China worth $200 billion. Beijing is unlikely to make concessions, so the ruble will be under pressure from the spread of the conflict.
Thursday, July 12, after the collapse of oil has risen in price for 0,82%, to $74,72 per barrel. This is a technical rebound, so it will have no impact on the pair dollar/ruble.
Negative news for the ruble muted positive expectations from the meeting of presidents Vladimir Putin and Donald trump. However, the weakening of the domestic currency because it will be restrained.
The Ministry of Finance from the placement of two OFZ issues was rescued from 39.04 billion with a total demand 111,26 billion. The office gleaning 1 billion. At the end of the day the index RGBI has grown. So market participants praised the auction as a success.
On Thursday the ideal option for the pair dollar/ruble is seen increasing to 62,80 RUB, EUR/RUB – to RUB 73,20 EUR/RUB may rise to the specified price on the background of the rising of the correctional movement Euro/dollar.
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Vladislav Antonov,
Analyst
Alpari