Forex Market: USD/RUB daily forecast

During yesterday’s trading session USD/RUB traded within the range of 34.846-35.153 and closed at 35.089, gaining 0.67% for the day.

At 6:11 GMT today USD/RUB was losing -0.05% for the day to trade at 35.079. The pair touched a daily low at 35.043 at 2:00 GMT.

Fundamental view

United States

Durable goods orders in the United States probably rose 0.5% in June, according to the median forecast by experts, following a revised 0.9% drop during the prior month. Durable goods orders, as an indicator, gauge the strength of US manufacturing sector and represent a major portion of nations Factory Orders. This is a closely watched report on manufacturing activity, because durable goods are the first type of goods to be affected by an economic downturn or upturn.

Durable goods are designed to last three or more years and encompass aircraft, automobiles and buses, cranes, machine parts, appliances etc. More than 85 industries are represented in the sample, which covers the entire United States. The logic behind this indicator is that consumers need to be very optimistic in order to buy an automobile in comparison with, for example, first necessities such as food or clothing. Therefore, durable goods are among the first goods, which a consumer may abstain from purchasing, in case overall economic activity begins to contract. The same is valid for company purchases. During a recession, an airliner is less likely to purchase new planes and as factory output contracts, it is less likely to purchase new machines.

Durable goods orders, which exclude transportation, probably rose 0.6% in June, following a flat performance in May. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders of durable goods.

In case orders increased at a faster pace than projected, this would have a bullish effect on the greenback. US Census Bureau is scheduled to release the official numbers at 12:30 GMT.

Russian Federation

The Central Bank of Russia probably left its benchmark interest rate on hold at 7.5% at its policy meeting today, according to experts expectations. The one-week repo rate has not been changed since central banks meeting, conducted on April 25th, when the Board of Directors decided to raise the benchmark by 50 basis points (0.5%). This decision came as a result of a more pronounced than expected pass-through effect of the exchange rate dynamics on consumer prices in the country and the boost in inflation expectations. The chance that consumer inflation in Russia may rise above central banks inflation objective of 5.00% at the end of the current year has increased considerably.

In June 2014 compared to June 2013 the annualized Consumer Price Index (CPI) climbed to 7.6%, while the annualized Core CPI reached 7.0% in May. In March and April the annualized consumer inflation in Russia was reported at 7.2%. The major factor, that triggered this acceleration, was probably the effect, which the recently observed national currency depreciation had on prices of a wide range of goods and services.

Short-term interest rates are of utmost importance for the valuation of national currencies. In case the Central Bank of Russia is hawkish about inflationary pressure in Russian economy and, thus, decides to introduce another rate hike, this may provide support to the ruble. Banks key one-week repo rate was at an all-time high of 10.50% in April 2009, while its lowest level on record, or 5.00%, was seen in June 2010.

The decision on policy is expected at 10:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 35.029. In case USD/RUB manages to breach the first resistance level at 35.213, it will probably continue up to test 35.336. In case the second key resistance is broken, the pair will probably attempt to advance to 35.520.

If USD/RUB manages to breach the first key support at 34.906, it will probably continue to slide and test 34.722. With this second key support broken, the movement to the downside will probably continue to 34.599.