Russia FX Beat - June 23, 2017

> Today's focus. EU and US sanctions on Russia. Oil reprieve.
> Global trigger: Yellen to speak next week. Yesterday was another quiet day in the G10 FX space, with major currency pairs trading in well-worn ranges. We do not look for any change to this today given the sparse schedule of events. Eurozone sentiment data is due at 11:00 Moscow time, while the US sees new home sales at 17:00. There will be interest in comments from several Fed members later in the day.
Looking ahead to next week, we note an announcement overnight that Fed Chair Yellen will speak in London on Tuesday. With markets scaling back pricing for a September hike to just a 15% chance, this event is important.
> Bottom line. EUR/USD to hold in a 1.1150-1.1200 range.
> Regional trigger: Sanctions. USD/RUB stabilized below 60 yesterday as oil prices regained some stability. Some support came from reports that Saudi Arabia is targeting an oil price of $60/bbl for its IPO of Saudi Aramco next year. If the Brent price can break above resistance near $46.20/bbl today, this would create a more constructive backdrop heading into next week.
Yesterday EU leaders agreed to roll over their sectoral sanctions on Russia by six months to the end of the year. This was entirely expected and even occurred without the usual backdrop of some countries kicking up a fuss.
More important for Russian market sentiment is the progress being made by a new sanctions bill. Despite some procedural complications, there is a strong motivation to capitalize on the current momentum to approve a bill before the end of July. Those pushing the bill realize that the Trump administration has little ability to stand in the way of its progress right now.
FX offer volumes in the banking system declined yesterday, which may indicate that the Essar Oil transaction has entered the final phase: the O/N swap rate fell from 9.00% (where it was quoted for the last week) at the open to 7.0-7.9% in the final hours of trading. Volumes declined by $2 bln.
> Bottom line. Support from oil prices plus Monday's major tax day might see USD/RUB pressured below 59.50. We would view this as a good buying opportunity.