Russian Ruble seeing mild gains despite US dollar’s retreat as investors lose confidenceThe Russian Ruble (USD/RUB) is seeing mild upward movement around the 93.80 mark, despite the US Dollar facing difficulties as Tuesday’s European session began.
Consequently, the Russian Ruble (RUB) is experiencing a second consecutive day of decline, reversing the gains observed last week. This shift can be attributed primarily to the unexpected interest rate increase by the Central Bank of the Russian Federation (CBR). Notably, the pair’s relatively stronger performance indicates a higher uncertainty level in the Ruble than the US Dollar. The sentiment is particularly evident amidst ongoing geopolitical tensions involving Ukraine and a recent retreat in oil prices.
Russian Ruble loses investor confidence
The Russian Ruble’s inability to capitalize on the US Dollar’s decline reflects traders’ concerns about potential economic challenges for the oil-rich nation. These concerns primarily stem from elevated inflation and the Central Bank of the Russian Federation’s (CBR) inability to effectively safeguard the currency despite implementing a substantial rate hike.
Meanwhile, the US Dollar Index (DXY) is marking a fresh intraday low near 103.20, declining for a second consecutive day, as market participants prepare for Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, an annual event hosted by the Kansas Fed. Concurrently, WTI crude oil is also experiencing a two-day decrease, falling to $80.00.
It’s important to highlight that uncertainty surrounding the Fed’s future actions, especially following recent strong US economic data, combined with concerns regarding China’s situation and expectations of higher US wage growth in the coming months, as indicated by the latest Federal Reserve Bank of New York survey. These factors are contributing to the upward momentum of USD/RUB.
In this context, the US 10-year Treasury bond yields reached their highest level since November 2007 earlier in the day, hitting 4.36% before retracing slightly to 4.34%. Additionally, S&P 500 Futures show mild losses, reversing the earlier recovery from a nine-week low.
Looking ahead, housing data from the US and speeches by mid-tier Federal Reserve policymakers will be significant for Russian Ruble traders. Most importantly, the market is closely eyeing Jerome Powell’s speech at the Jackson Hole Symposium on Friday, as it could provide crucial guidance for future directions.
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