The USD/RUB continued rising as investors reacted to hawkish statements by Fed officials and the escalation on Ukraine issues. The pair rose to a high of 63.18, which was the highest level since July of this year. It has risen by more than 24% from its lowest level this year.
Fed hawkish tone continues
The USD to Ruble price continued rising as investors focused on the hawkish statements by several Fed officials. In an interview with CNBC on Monday, Fed’s Charles Evans said that the bank will continue hiking interest rates in the near term. This sentiment was shared by Fed’s vice chair, Lael Brainard, who cautioned that rates will likely remain at an elevated level for longer.
Looking ahead, the next key catalyst for the USD/INR price will be the upcoming US consumer inflation data. Analysts expect the data to show that consumer prices declined slightly in September but remained at an elevated level.
Precisely, the expectation is that the headline CPI rose by 8.3% in September while core CPI rose to 6.5%. Inflation expectations, as measured by the breakeven point, has dropped to the lowest level in months.
The other key catalyst for the USD to INR price will be the upcoming US retail sales data. Analysts expect that sales slowed down in September as the cost of items rose.
Meanwhile, the pair is also reacting to the comeback of oil and gas prices after last week’s decision by OPEC to cut production. Rising tensions between western countries and Russia are also playing an important role.
In my last Russian ruble forecast, I predicted that the currency was about to bounce back. This view did not work out as the USD/RUB has continued rising amid a hawkish Federal Reserve. It has managed to move slightly above the 25-day and 50-day moving averages. The pair also rose above the important resistance level at 62, which was the highest level in September.
Therefore, the outlook for the pair is neutral with a bullish bias due to the strong US dollar. If this works, the next key level to watch will be at 65. The stop-loss for this trade will be at 60.