Russia FX Beat - December 1, 2017

> Today's focus. Oil prices stable, US Senate debates tax bill.
> Global trigger: Tax bill vote today? The dollar's performance was mixed yesterday, in contrast to strong US equity market gains. The Dow Jones 30 Index broke above 24,000 for the first time, while November's monthly gain means major US equity indexes have climbed for eight straight months.
A good portion of the upbeat sentiment comes from the progress made on the US tax reform front. This might suffer a setback early today, after a vote to pass a Senate version of the bill was postponed overnight. Attempts to fix the bill will resume today, with a final vote still possible by the end of the day. If passed, the Senate and House will then aim to reconcile their differences and deliver a final bill by year end. If this is achieved, it would be good for the dollar against other G10 FX. However, because of the boosted US growth prospects, it would perhaps also be supportive for EM FX.
Today's schedule is quite quiet, with the main highlight being the US ISM manufacturing survey at 18:00 Moscow time. Given that the first Friday of the month falls on the first of the month the US jobs report is not due for release today; it will instead arrive next Friday. Several Fed officials speak in the second part of the day.
> Bottom line. EUR/USD can hold above 1.19. If the Senate passes its tax bill, a move below this level may well occur.
> Regional trigger: OPEC+ cuts extended. In short, OPEC+ delivered on market expectations yesterday. Its current deal to cut output by 1.8 mln bpd, due to expire at end 1Q18, has now been extended to the end of next year. In addition, Nigeria and Libya have also pledged to cap their output at this year's peak levels.
The message coming from OPEC+ is one of unity, especially from Saudi Arabia and Russia - the dominant producers. The decision on the extension was unanimous.
In the short-term, the question is whether a "buy the rumor, sell the fact" situation arises with oil prices. Bears will argue that an OPEC+ review of the deal in June represents a risk to the longevity of supply cuts next year. Longer-term, the question is whether US shale production will surge on the back of OPEC+'s hard work.
> Bottom line. For now USD/RUB and Brent prices remain stable, with few obvious catalysts today. If the US progresses on tax reform today, EM FX will be supported at the open on Monday. The ruble might lag this move, however.