Russia FX Beat - December 4, 2017

> Today's focus. US tax reform closer.
> Global trigger: US politics. Late on Friday, two major developments in US politics that will impact markets today emerged.
First, the Senate narrowly passed its tax reform bill, the centerpiece of which is a large corporate tax cut. The Senate and House will now try to reconcile their respective bills before year end, aiming to give President Trump his first major legislative win. The dollar should react positively, to the extent that tax reform might stimulate faster growth in the US.
Less clear in terms of its implications for markets was the second development - that former Trump National Security Advisor Michael Flynn would cooperate with the special counsel probe into the US election last year.
In addition, the US government faces a potential shutdown on Friday if Congress does not pass a temporary funding bill. Data-wise, the main event this week will be the jobs report on Friday.
> Bottom line. EUR/USD to push lower toward 1.1800.
> Regional trigger: Flynn to weigh on ruble. Last week's OPEC+ summit passed smoothly, the Brent price ending the week close to where it started it, near $63.50/bbl. Since the correlation between oil and the ruble has been deteriorating this year, it was not a given that the ruble would follow oil higher recently.
As it turned out, it has been trading generally weaker. This was accelerated by the Flynn news, because of the interest about relations between President Trump's election campaign and the Russian government.
It is too early to draw conclusions about the market implications of the story, but it may add to anxiety over a report that is to be provided to Congress about potentially expanding sanctions against Russia, including banning US investors from investing in Russian sovereign debt.
Locally, there are two things we will focus on this week. First is tomorrow's announcement on December FX interventions. We expect an increase from last month's $2 bln. Second is November CPI, which will be released either on Wednesday or Thursday. The consensus sees the y-o-y rate having dropped to 2.5% from 2.7% in October.
> Bottom line. USD/RUB is biased toward 59.20-59.30.