Ruble rises against dollar before fed meeting
The ruble today with the opening of the rose against the dollar with 65,90 up to 65,70, however, as of 13:00 Moscow time almost returned to the levels of the beginning of the day and is trading near 65,85. On the market felt the universal wait-and-see mood before the present recession in the United States (press conference of the head of the Federal reserve starts at 21:00 GMT). We can say, the coming FOMC meeting on the importance for the markets close to memorable the November statement of the former head of the Federal reserve Ben Bernanke in 2008, where the fed made the decision to launch the first program of “quantitative easing”.
Judge for yourself. Yield benchmarks – 10-year and 30-year U.S. Treasury bonds – approached key resistance levels, and the flattening of the yield curve is threatening to lead to an inversion that is unfavorable for the expectations of the US economy and the world in General. I wonder if the fed ignore these signs as part of its section on the economic predictions, and guess if any of the journalists from the audience to ask him this question.
Thus, today, depending on the tone of the rhetoric of Powell’s, you can expect that the situation with the flat yield curve UST’s will develop in the direction of normalization, or will be started the scenario described above. It is essentially tantamount to a confession that the flattening of the yield curve of treasuries portend nothing but the beginning of a countdown to the next cyclical economic crisis.
Bad service the dollar was assisted by yesterday’s statement trump at the UN General Assembly. Although the performance in General went more smoothly compared to his speech a year ago, which is almost the Central theme was indignation at the audacity of Kim Jong-UN, the devil, as you know, again, lay in the details, which are well read in the faces of the representatives of the delegations of most countries, present in the room. It seems that the world was without “economic conductor”. All the relevant topics that are not related to a La speech before the American voters have heard only fragments of his negative agenda “currency manipulation” unfair canons of international trade, OPEC bad, vzvinchivanie oil prices… Claim. Claim. Claim.
From the rostrum of the UN trump was talking about America exclusively in the context of the economy (or adherence to classic values, that is a cliche), then how about the rest of the world – as only from the standpoint of policy. It has not been clear whether trump believes that the global economy is in good condition, and that explains the neglect of this aspect in his speech, or all of the world is not entirely recovered from the effects of the financial crisis of 2008, and then all there is a keen sense of understatement (and that was reflected on the faces of the representatives of the delegations).
Under such circumstances the only correct solution today, the fed would refrain from raising rates. But then Powell would risk to meet the criticism of the skeptics of the policy of monetary tightening as the end of the year he did not have time to make the promised two rate hikes. Ironically, a rate increase of more than 25 b.p. can cause short-term simultaneous correction of all key us assets, which will lead to further rally in oil, which, in turn, will support the ruble. Otherwise, the dynamics of exchange will be more peaceful – but only to the extent to which investors will see a normalization of the distribution of returns of US government bonds is that in the current situation acts as the main factor and a major landmark.
“International financial center”