Russia FX Beat - July 24, 2017

> Today's focus. OPEC meeting in Russia.
> Global trigger: Waiting for the Fed. The focus this week returns to the US. The Fed will make a policy decision on Wednesday and 2Q GDP data is scheduled to be released on Friday.
With regard to the Fed, nobody expects a change to the 1.25% policy rate. Attention will instead be paid to potential changes in rhetoric and comments regarding the balance sheet. Our view is that, with a long eight weeks until its key September meeting, the Fed's main goal will be to keep all of its options open.
The Fed wants to let US economic data tell its own story, and, to this end, the 2Q GDP data, due on Friday, is important. The consensus estimate sees an annualized Q-o-Q acceleration to 2.5% from a disappointing 1.4% in 1Q.
Given that market pricing of further US hikes has turned very cautious, we think that it will be hard for the Fed to deliver a dovish surprise this week.
> Bottom line. Today's highlight will be Eurozone PMI data. An upside surprise may help EUR/USD move closer to 1.17.
> Regional trigger: More US sanctions, dividend and tax payments. US congressional leaders announced over the weekend that they had struck a deal to pass a new version of the Russia sanctions bill through the House of Representatives, possibly as soon as tomorrow. According to media reports, this will happen via a fast-track procedure requiring a two-thirds majority, which would show to President Donald Trump that the bill would pass even if he vetoed it.
The bulk of annual 2016 dividend payments will be made this week and next week, in line with company deadlines, the last of which is August 3. We expect almost R564 bln to be paid, with $2 bln of FX selling. Today is the deadline for Lukoil (R102 bln due), for which we expect $0.4 bln of FX selling. More important are tax payments due this week, for which companies owe almost R1 trln. We expect almost $4 bln of FX selling.
Local headlines will be generated by a meeting of Russia and OPEC members to discuss their output cut deal. Media reports have suggested that compliance has slipped amid increased production in Libya and Nigeria.
> Bottom line. FX selling should offset weaker oil prices, but USD/RUB should remain in a range of 59.40-59.80 today.