Iran and the United States pushed oil prices to four-year highs
It seems that last week, the markets move “contrary to” rather than “due”. Strong corporate reporting of the companies surpassed expectations, caused active buying on the stock markets. Weak US data and cautious comments of the fed, which should cause a weakening of the dollar, did not stop its growth. On the contrary.
The return of U.S. sanctions against Iran and the intensity of geopolitical tensions contrary to the logic of that didn’t escape from risks. The markets turned to growth, and the US dollar turned lower.
One only the oil continues to rally, fearing problems with the supply due to middle East geopolitics. This morning a barrel of Brent reached $77.80, get close to those marks where the oil was traded at the end of 2014, before the decision of OPEC to limit production, causing the gain of the collapse.
The rally of oil, having increased by 9% from the lows of the month helps Thursday the ruble. The Russian currency noticeably increases. USDRUB on Mosberg lost about ruble to levels of closing of Tuesday, and is trading at 62.25. EURRUB fell below 74 and traded down 1.07 ruble – the lowest level since April 9.
The dollar added not only a “commodity” currency, but in General, the unit of currencies of developing countries – clear evidence of increasing demand for risky assets.
Should carefully treat the dynamics of oil: the pendulum of geopolitical tensions could easily swing in the opposite direction, ceasing to maintain quotes. Technically oil looks overbought and vulnerable to a correction, although it is possible that the bulls manage to heat it up to 80 dollars per barrel.
And yet all the major risks for the ruble remain in force. Sanctions pressure on our country could intensify in coming months. The chances of this will increase if the same strategy will bear fruit in the case of Iran. The fed remains on the path of monetary policy tightening, which promises to further reduce the yield spread between bonds of the US and developed countries. Geopolitics typically has no lasting effect on oil prices.
Thus, short-term, the Russian currency can continue to play the strengthening of the oil, but remains vulnerable from a broader perspective, as all the factors that previously provided the pressure did not disappear, but only temporarily passed by the wayside.