The ruble: a reaction to a trade war will cause the dollar to rise

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A new round of escalation of tariff wars in the style of “a tooth for a tooth” has interrupted the victorious March of the Russian currency, expanding it to lower on Friday. Over the weekend, fears of the markets are starting to get polglish. In their statements, China and the United States tried to emphasize the readiness of both sides to anything to negotiate. However, trade disputes are still far from a resolution, which, of course, actively affects the position of the habit. So, the ruble/dollar continues to jump with 65.50 to 66.22 and EURRUB with up to 72.53 73.75.
A similar reaction is divided into several layers.
First, it demonstrates a new round of anxiety in the markets. Now this dynamic actively provokes an escape from earning assets (including, recall, the ruble and the yuan) in assets protection (it’s the yen, gold and bonds). Yes, the markets calmed down, however unpleasant dissonance between stated progress in negotiations and actual tightening of rates is still on the agenda.
Second, the tolerance of the fed to inflation and readiness for mitigation in response to external risks is bad news for the dollar. It would explain the sluggish weakening of the ruble to the dollar, compared with its failure to Euro.
Third, macroeconomic trends are still in favor of decreasing demand for oil. For Brent the way out of this situation can be either through lower prices or through the suppression of the proposals. In the second case, the ruble may receive short-term support, however, the fall in revenues will undermine the exchange rate.
The combination of all these factors forms a moderately negative picture for the ruble. So, trade conflicts before that fueled the growth of the dollar and, presumably, will do so. This gentleness the position of the fed very quickly be adopted by other CB that will not allow the USD to weaken. Historically, U.S. currency has a tendency to take positions in that period when the world economy come the good times. And the fed with rate cuts in this case is innocent.
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