Russia FX Beat - August 30, 2017

> Today's focus. EUR/USD rejects move above 1.20 - for now.
> Global trigger: "Whatever it takes" rejection. Global markets are figuring out what Hurricane Harvey in the US and North Korea's ballistic missile test over Japan mean. They have taken both events with relative calm so far, but the longer-term consequences of both are not yet clear.
The initial risk-off reaction yesterday wore off as the trading session progressed, with safe-haven assets (e.g. JPY, CHF and gold) handing back initial gains. Overnight, the dollar, which at one point had been down against all major currencies yesterday, strengthened.
Most notably, EUR/USD, which had risen to as high as 1.2070 yesterday, has reversed back down to 1.1950 this morning. The level at which the reversal started is, interestingly, the key level from 2012 when ECB President Draghi promised to do "whatever it takes" to save the euro from the Eurozone debt crisis.
Today, aside from the North Korea and Harvey headlines, markets will have plenty of data to analyze. German CPI data for August (15:00 Moscow time) will give hints about tomorrow's Eurozone CPI print. Similarly, in the US, August ADP employment (15:15) will give guidance toward Friday's full jobs report. Today, the US also sees 2Q revised GDP data and a speech from Fed voter Jerome Powell at 16:15.
> Bottom line. An oversold dollar and better US data can help EUR/USD to edge further below 1.1950.
> Regional trigger: Ruble ignores Otkritie. The big local news yesterday was the CBR's announcement that it had taken Otkritie Bank into financial rehabilitation through its banking sector consolidation fund (BSCF). Although this news had almost no impact on the ruble, the effective nationalization of what was the largest non-state bank in 1H17 will likely lead to further scrutiny of the financial health of other large non-state banks.
For now, there is good reason for the ruble to stay supported. Currently, EM FX volatility is beneath that of G10 FX volatility, which is rare. This is a positive backdrop for EM carry trade plays, for which the ruble remains popular.
Today's calendar sees weekly CPI (16:00) and US EIA oil inventory data (17:30).
> Bottom line. With the tax period over and exporters favoring a USD/RUB higher toward 60, corporate activity is subdued. We think that USD/RUB will probably edge toward 59.