The ruble: the Bank of Russia may derail the market

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The pair EURRUB four trading sessions in a row circling around the 77.00: every time a weak start of the day invariably turns out to be a strengthening of the Russian currency after the main session on Masuria. The explanation that at that time also grew and a common desire in the direction of risks does not hold water. Yesterday, for example, the U.S. markets dropped, but the ruble has maintained its model of behavior, closing trading Monday at 76.90 per Euro.
Cautious appetite for growth shows the USD / RUB pair. On Monday it rose by 20 cents, closing the day at 67.08. In the chart formed a trend of higher daily lows which is a sign of a trend in growth.
Tuesday promises to be an emotionally eventful day: the Bank of Russia will return to purchases of foreign currency in the execution of the budgetary rules of the Ministry of Finance, and is expected to Draghi’s speech in the European Parliament and an important vote on the adoption of a plan for Brexit in the British House of Commons.
The return to the market of Bank of Russia purchases should not exert significant pressure on the ruble. Risks for the national currency, but rather, is the reaction of investors: they can of impulsive pressure on the ruble in the first half of the session, however, it is unlikely that this response will be long lasting.
The ECB President’s speech is especially important in the context of the economic condition of the Eurozone and the attitude of the Central Bank to curtail stimulus despite the reduction of growth rates. It is not easy to explain to the legislators.
Even more difficult is the case with the reaction of the markets to vote for Brexit. There is little doubt that the government may not receive approval for the current plan. The intrigue consists only in how loud it will be defeated. It should be noted that before the referendum in 2016, observers did not see much intrigue, but made a serious mistake that caused extremely sharp reaction of the market. Now it is also impossible to completely dismiss the explosion of volatility at the end of the day, the voting results and further comments.
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Alexander Kuptsikevich,
Analyst
FxPro