USDRUB is up from yesterday’s lows of 55.9615 to the current 59.3750, while EURRUB rose 1.27% to 69.5690 while articulating.
For now, the spot long USDRUB trade recommendations are not encouraged, for a profit of 4.15% (including negative carry).
The combination of a Fed overlooking benign core inflation, rising core yields and adjustment of ECB policy is nonetheless likely to constitute a mild tightening of financial conditions for EM, which warrants adding to bearish FX positions, which we do via JPM’s UW ZAR in the GBI-EM Model Portfolio, complementing our existing long vol positions in Russia (08-Dec-17 USDRUB calls of 59 strikes).
Oil prices have stabilized, the CBR is less eager to cut the policy rate as aggressively as previously thought, and geopolitical headlines are turning more neutral and could improve further with the Trump/Putin meeting this Friday.
We continue to hold a USDRUB appearing call spread (initiated in the recent past) as a tail risk hedge on our long high yield exposure in MXN, TRY, and ZAR. The appearing call spread was opened at 1.23% and is currently at 2.40%.
Option Trade Strategy: Buy 3m USDRUB call strike 59, Sell call strike 62 knock-in 65 Indicative offer: 1.23% (vs 1.06% for the vanilla call spread, spot ref: 59.3750) The position entails buying a USDRUB 3m call strike 59 financed by a call strike 62, with a topside knock-in at 65 only on this short leg.


Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data
JPMorgan Lifts Gold Price Forecast to $6,300 by End-2026 on Strong Central Bank and Investor Demand
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge
China's Refining Industry Faces Major Shakeup Amid Challenges
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes
Geopolitical Shocks That Could Reshape Financial Markets in 2025 



