13.01.2020: Will RUB continue its rally? (Brent, USD/RUB)

13.01.2020: Will RUB continue its rally? (Brent, USD/RUB)

New trading week started on a positive note. Investors shifted their attention to the US-China trade deal, while tensions in the Middle East are gradually easing. Oil attempts to regain ground after the recent sharp decline. However, it displays no strong dynamics so far. The ruble continues to advance on an increased risk appetite.
Brent is trading with small gains early in the day and has settled at 65 dollars 09 cents per barrel. American crude is following the same trajectory. West Texas Intermediate is currently trading at 59 dollars 19 cents a barrel. Last week, both Brent and WTI declined considerably on the fears of a war conflict between the US and Iran. Brent crude was down 5.3% while WTI lost 6.4%
Although the geopolitical tensions have eased and markets calmed down, there is still a risk of further escalation of the conflict. There is no guarantee that Iran is not planning further retaliation actions. Oil traders may underestimate the risks that still exist in the Middle East.
This week, oil markets anticipat the visit of the Chinese delegation to the United States where the signing of the phase one trade deal should take place. However, traders’ reaction to this event may be rather sluggish. Oil quotes are expected to stay at the comfortable levels while traders may start taking profit upon signing of the deal. Such a scenario my weigh down on the commodity prices.
The trade agreement is scheduled to be signed on Wednesday, January 15, which coincides with the publication of the OPEC monthly report. This means that market participants will evaluate the data on crude inventories in the countries-members of the Organisation for Economic Co-operation and Development. This data is essential for indicating the balance in the global oil market.
The ruble opened this week moving slightly higher. The dollar/ruble pair retreated below the level of 60. Last time the pair was seen trading at this level in April 2018. The Russian currency is getting support from an increasing risk appetite ahead of the upcoming trade deal conclusion between the US and China. The ruble is expected to hold around the level of 60. The first half of the week promises to be more successful for the Russian currency than the second one. The details of the trade agreement may not be as positive as the traders expected.
Currency index of the emerging markets went up to 1669 points which is the highest reading recorded since June 2018. The technical factors remain positive for the ruble as well. The dollar/ruble pair is likely to face support at the level of 60.7.

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