Russian economic downturn and oil slump keep up pressure on Rouble

Latest PMI report revealed that economic downturn is not done with. PMI index, which is a gauge for manufacturing slipped to 48.3 in July from 48.7 in June. A number below 50 indicates contraction and vice versa. Russian PMI has remained below 50 mark for eight consecutive month.

Key highlights -

• Output dropped for third consecutive month, indicating slowing demand.
• New orders and business continued to decline both in domestic front and from abroad.
• Due to weaker Rouble, input costs have surged, however companies as of now are not passing onto the customers.
• Jobs continued to get lost in the sector.

To add further to the woe, oil prices have slumped significantly over last few weeks.

• Price of Brent benchmark has fallen towards $50/barrel. Currently trading at $50.6/barrel. Oil is the major export revenue generator for Russia, which along with lower price, facing tougher competition from other oil exporters.

Active trading call -

• Long dollar against Rouble from 54, next target lies at 63. Small positions can be added targeting 70 mark, however expect higher volatility. Buying at correction is advised.