Article by ForexTime
If you thought the USDRUB price was sky high on Monday, today the pair has been touching the stars with the Ruble weakening against the USD by over 20% today alone. The pair appreciating close to 80 just moments ago and this incredible move has occurred despite the Russian Central Bank (RCB) making a desperate attempt to strengthen the Ruble, by increasing interest rates from 10.5 to 17% overnight.
Despite this, the markets completely swept aside the RCB’s attempt to strengthen the Ruble, with investors being fully aware that the current economic conditions are very heavily stacked against Russia. I mentioned previously that the economic sanctions had contributed to the Ruble decline, with the recent drop in oil prices accelerating the Ruble weakness. Today, I think investors are beginning to price in the inevitable prospect of a recession next year and, until the oil markets find themselves a floor, there is no ceiling for Ruble weakness.
What’s particularly fascinating about this move is that the USD itself has actually weakened against the majority of its counterparts today. The pressure we noticed on global equities overnight is now weighing on the USD, with this move inspiring the EURUSD to appreciate to its highest value in nearly a month, at 1.2568. The German ZEW survey coming in at a 9-month high provided a welcome boost to the EU economic sentiment, but it is USD weakness that is behind today’s appreciation in the pair.
The USD weakness has actually led to investors completely ignoring UK inflation levels falling to a 12-year low at 1%, with the GBPUSD soaring by over 160 pips to trade at 1.5789. Gold has managed to climb its way from $1192 to trade as high as $1223, with major resistance for the metal being seen at $1238.
Written by Jameel Ahmad, Chief Market Analyst at FXTM.
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