Rouble sells off on fresh risk aversion

Friday, August 29, 2014

The rouble dropped to a record low against the dollar as it weakened a further 1.5% against the dollar yesterday, reaching levels towards 36.8926 throughout the day. The rouble had been consolidating in a sideways pattern just above tentative levels around 36.00 throughout much of August as market participants took a pause after substantial weakening throughout July which saw the currency trade towards 36.00 from 33.7332 at the start of the month.  However, with details emerging yesterday of Russian troop movements within Ukraine’s borders investors sold off the currency and activity this morning has seen further weakness as the rouble traded towards a fresh record level of 40.00 against the dollar. Threats of further sanctions against Russia also saw the MICEX sell-off sharply after the index managed to recover much of July’s steep losses throughout August. After closing 1.67% lower on Thursday trading today has seen the index sell off below the 100 day MA in early trading before recovering somewhat above 1,420, however, the MICEX index remains on track to end the week lower, snapping a two week rally.

Demand for safe havens saw gold prices extend gains yesterday as prices closed just below $1,290/oz after breaching firm resistance at the 200 day MA, closing higher for the third straight session. Activity this morning has seen the yellow metal find firm support at yesterday’s close and investors will be watching the Russia/Ukraine situation closely for any further developments which could signal increasing pressure or intervention from Western powers.

The JPY remained on track to post weekly gains as demand for the safe haven currency increased and risk appetite was curbed. After struggling to hold significantly above 104.00 earlier on in the week moves yesterday saw the yen strengthen towards 103.50 against the dollar, however, levels have since pushed back towards 103.80 early on this morning. The euro/yen cross saw levels soften below 136.50 for the first time in three weeks as investors quickly resumed selling off the euro after a brief respite on ECB comments earlier this week.

RUB weakens against USD after consolidating around 36.00

USDRUB Curncy Russian Ruble SPO 2014 08 29 07 42 52

MICEX sells off sharply on fresh sanction concerns

INDEXCF Index MICEX Index 2014 08 29 07 51 21

Haven demand boosts JPY against EUR

EURJPY Curncy EUR JPY X RATE 2014 08 29 08 02 10

Events for today

0030

JP

Jul

CPI

0930

UK

Q2

GDP 2nd Release

1000

EZ

Jul

Unemployment Rate

1000

EZ

Aug

Inflation

1330

US

Jul

Core PCE Price

1445

US

Aug

Chicago PMI

1455

US

Aug

Michigan Survey

LT: 

Aug  Copper, Gold & Silver (COMEX) 

 

Sep  Natural Gas (NYMEX) 

Topics: Gold, EUR, JPY, RUB
More from: Kash Kamal