RUB hits five week low against dollar

Tuesday, June 02, 2015

The rouble dropped to a five week low yesterday, losing almost 2% against the dollar as the currency struggled to hold on to tentative gains towards 50.00 throughout May. The Russian central bank were quick to react to the move which breached both the 200 day and 50 day moving averages, suspending the sale of 1-year repo agreements as it stepped up efforts to tighten liquidity. With lower crude prices compounding on the weaker rouble Russian investors have been doubly hit and policymakers will no doubt step up efforts to stabilise choppy market conditions but could instigate further depreciation in the rouble in an effort to boost exports and negate some of the impact of lower commodity prices owing to a stronger USD.

A choppy session yesterday set the tone for the remainder of the week as a flurry of US economic data releases yesterday supported Wall Street higher. Better than expected April personal income data, which accelerated by 0.4% m/m, as well as stronger construction and manufacturing activity as both construction spending and manufacturing PMI exceeded expectation, coming in at 2.2% m/m and 54.0 respectively, were the catalysts for the move higher. However, the positive sentiment failed to spill over to the Asian session which saw some short term profit taking in most markets excluding Chinese mainland stocks, which continued their upward march after a brief correction last week.

Talks between Greece and its creditors intensified as concerns that Greece may miss its June 5th deadline to repay the IMF prompted eurozone leaders to take swift action. Angela Merkel, Christine Lagarde, Mario Draghi, Francois Hollande and Jean-Claude Juncker held an emergency meeting last night, hoping to come up with an offer in the coming days that wouldn’t instantly be rebuffed by Greece. The indebted nation is quickly running out of time and with €1.6bn payment due on Friday investors are eagerly awaiting any signs of progress and are understandably fatigued after five months of talks and missed deadlines. The euro is trading slightly higher this morning, towards 1.0950 against the dollar as it attempts to recover territory back above 1.1000 and we expect a volatile session as investors await the outcome of the talks with eurozone CPI and PPI data also in the mix.

RUB swings towards 53.50 against USD

RUB Curncy Russian Ruble SPOT 2015 06 02 07 23 58

US construction activity spikes higher

CNSTTMOM Index Census Bureau US 2015 06 02 07 37 46

EUR struggled to recover above 50 day MA

EUR Curncy Euro Spot 2015 06 02 07 51 37

Events for today

0855

DE

May

Unemployment Change

0930

UK

May

Markit Construction PMI

1000

EZ

May

CPI & PPI

1445

US

May

ISM  manufacturing

1500

US

Apr

Factory Orders

1500

US

Jun

IBD Sentiment

Topics: ECB, PMI, EUR, RUB, IMF, Greece
More from: Kash Kamal