Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
RBNZ Cuts Interest Rates Again as Inflation Cools and Recovery Remains Fragile 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
BOJ Signals Possible December Rate Hike as Yen Weakness Raises Inflation Risks 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
RBA Signals Possible Rate Implications as Inflation Proves More Persistent 
Singapore Maintains Steady Monetary Outlook as Positive Output Gap Persists into 2025 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Japan’s Finance Minister Signals Alignment With BOJ as Rate Hike Speculation Grows 
Bank of Korea Holds Interest Rates Steady as Weak Won Limits Policy Flexibility 
The ruble has been the top performer among EM currencies over the past month, which is surprising given the lingering oil price and sanction risks weighing against it. A further rate hike by CBR today could further bolster this performance in the near-term. The median consensus expects no change in rate at today’s meeting. But a non-trivial proportion of analysts do expect a 25bps hike – we fall in this camp.
We could foresee three major drivers predominantly for a rate hike:
1) Potential ruble weakness/volatility if the oil price fails to move higher even after OPEC production cuts.
2) High likelihood of fresh sanctions in the new year which could rock the currency.
3) Pre-empting an assumed Fed rate hike in December. Top this off with CBR governor Nabiullina's remark – that the market should not anxiously scrutinise every small rate step as these are unlikely to have any effect on the economy – and these make a 25bps rate hike likely today. This should be the last one in this cycle and the next move in rates could be down. The above reasons are not very strong because growth in Russia is quite anaemic and inflation below target – there is no strong reason why CBR should be so anxious about every little ruble volatility either.
Trade tips: At spot reference: 66.495 levels, 2m USDRUB 1x1 put spread (67.057/64.14) is advocated. Courtesy: Commerzbank
Currency Strength Index: FxWirePro's hourly USD spot index is inching towards 140 levels (which is bullish), while articulating (at 12:08 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
