Central Bank of Russia (CBR) Lowers Key Interest Rate By 50bps to 6.50%

The Central Bank of the Russian Federation (CBR) has announced a reduction in its key interest rate by 50 basis points to 6.5%. However, the USDRUB pair was largely unchanged and continues to trade at 63.9853.

According to Reuters news agency’s coverage of the announcement, the Bank of Russia will consider further interest rate reductions in future meetings if the situation continues to develop in line with baseline forecasts. The CBR has forecast Russia’s GDP to remain at 0.8 – 1.3%.

The CBR noted that “disinflationary risks exceed pro-inflationary risks over the short-term horizon.” It also noted that “significant risks are posed by elevated and unanchored inflation expectations,” while also noting that the growth rate of Russia’s economy is still subdued and that monetary condition had continued to ease since the last meeting of the board.

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Technical Outlook for USDRUB

USDRUB bounced off the lows of 63.5953 (S2 pivot) earlier in the week. This bounce area happens to be the site of previous lows on March 20, April 23 and September 24. This area is therefore established as a support level. Below this area, 62.5417 is the nearest medium term support and this area could be attained if price breaks below 63.5953. A pitstop lies along the way at 63.1696 (March 21 low).

To the upside, resistance lies at 64.3753 (R2 pivot and previous lows of 29 April and May 24 acting in role reversal). Above this area, 65.5680 (the highs of May 3, June 3, August 5 and October 2) remains a strong price resistance. A break above 643753 opens the door to this level.Download our latest quarterly market outlook for our longer-term trade ideas.

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