Russia FX Beat - August 24, 2017

> Today's focus. Sterling pressured as market weighs Trump.
> Global trigger: Awaiting a catalyst. EUR/USD is holding close to the 1.18 level, where it has been all of this week. There is hope that the quiet week will liven up ahead of speeches tomorrow by Fed Chair Yellen and ECB President Draghi.
Last week, minutes to the most recent ECB meeting suggested building concern over the strength of the euro. Therefore, a comment overnight from ECB member Ardo Hansson that he did not think that there had been a "big change" in the euro is notable. This might lend support to the currency today.
In general, markets and broad sentiment remain somewhat under pressure from remarks made by the US president on Tuesday evening. Trump said that he was prepared to shut the US government down in order to get funding for his US-Mexico border wall. Partly in response, the 10y Treasury yield has fallen close to 2.15%, its lowest level since late June.
The US debt ceiling being hit at the end of September, resulting in a government shutdown, is a low-probability, high-impact event. Investors should monitor the situation closely.
> Bottom line. Away from the stable EUR/USD, EUR/GBP is gaining rapidly, having broken important resistance at 0.92.
> Regional trigger: Ruble stuck at 59. USD/RUB witnessed a similar experience again yesterday, with the 58.90-59.00 level proving to be insurmountable support. Flows are in general balanced. As anticipated, this month's relatively small tax sum has not generated great demand for the ruble. With the main payment deadline falling tomorrow, if there is to be a pickup in ruble buying, it should happen today.
Yesterday's CPI data for the week ending August 21 showed prices flat w-o-w, ending the streak of three successive 0.1% declines. However, inflation is -0.2% since the start of the month, suggesting a m-o-m decline will be recorded in August. This being the case, y-o-y CPI is likely to edge lower from July's 3.9% when the full-month data is announced in the first week of September.
Weekly gold and FX reserves data is due at 16:00 Moscow time today. Reserves may climb above $420 bln for the first time since the CBR floated the ruble in November 2014. So far in 2017, reserves have increased by an impressive $43 bln.
> Bottom line. USD/RUB to once again test but not break 59.