Currency News: Russian Ruble Climbs While US Dollar Drops
Currency News
Russian Ruble Climbs In Correlation With Rising Oil Prices
Earlier today, the ruble strengthened against the dollar by 0.5%, to 62.49 per dollar. With an inverse correlation, it had caused 10 year bond yields to drop, raising the prices of those bonds. Though the correlation between (crude) oil and the ruble has been weakening in 2016, as the Russian economy has made dramatic improvements, it continues to remain highly correlated to the market in relation to its peers, i.e. the USD. As OPEC has been finalizing its oil output reduction, oil has been rebounding for its low, helping countries like Russia that are heavily dependent on oil recover.
Looking forward, investors are anxious to see whether European countries and possibly the United States will place further sanctions on Russia over the Syrian Crises, or whether an agreement will be reached. As a result, the three-month implied volatility is now at 13.60%, up over 1% from its two-year low at the beginning of October.
USD Drops Amidst Weak Manufacturing Data For The Second Straight Month
Over the past few days the dollar has fallen relative to peers, i.e. the euro. This came as manufacturing data showed a contraction in activity, specifically in the New York area. Most investors remain optimistic for the dollar, and have pushed aside this fall as a short-term drop. The reason is because most investors expect the Fed to raise interest rates come December time, as both many Federal Reserve members have announced that they believe the U.S. economy to be reach a full employment level along with satisfactory inflationary reports. “All things being equal, the Fed should still be ready for a December move, and the short-term dollar consolidation we’re seeing today should be nothing more than that—short term,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce.
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