Potential signal:
- This is a market that could break down.
- This is a currency, the ruble that is, which has been so oversold that it no longer reflects reality.
- With the Russian central bank buying massive amounts of gold, the ruble is helped.
- I am a seller on a cooler than expected Core PCE Price Index number, expected to be 0.1% month over month.
- If we rally, I will step away for the time being, and wait near the 89 RUB area.
In my daily USD/RUB analysis, I see a lot of volatility. In fact, we are down 2.7% as I record this video, which is a pretty big move in the currency world. It shows that perhaps the Russian ruble is going to continue to strengthen. Despite calls for a complete collapse of the ruble in the economy, you can see that we have been fighting our way back down in this pair since the initial spike due to the war in Ukraine. It currently looks as if the 80 ruble level underneath is going to be very difficult to overcome. So, I am paying close attention to that.
But at the end of the day, we certainly look like we are going to do everything we can to get down there. Now, having said that, we have the core PC price index numbers coming out on Friday and that will have a major influence on the greenback. Maybe not directly on the ruble, but it will show itself here, obviously, as the greenback will be a big mover potentially.
Expectations of Core PCE Price Index
It is expected to be 0.1% month over month, so any reading over that probably causes the US dollar to spike against multiple currencies around the world, and that of course will have a certain influence on this pair as well, as it is somewhat thinly traded. That being said, I think this is a market that will be paying close attention to the 50-day EMA near the 89 rubles level, and then again, the 200-day EMA near the 90 rubles level. All things being equal, this is a market that I think is going to continue to see a little bit of negative pressure. Unless of course that core PCE price index number is a lot hotter than anticipated, that could change things. But if, and when we get through that, I think the overall downtrend could continue. This will be especially true with oil continuing to show signs of life.
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