Russia FX Beat - November 10, 2017

> Today's focus. US tax delay concern, Venezuela set to default.
> Global trigger: Tax cut delay risk. In falling by almost 0.5% yesterday, the DXY Index suffered its worst day since September 7. The decline was triggered by the unveiling of the Republican Senate tax reform plan, which included a delay to cutting the corporate tax until 2019. This goes against both the House plan and also President Trump's ambition to reduce the corporate tax rate from 35 to 20% next year.
Despite the fall in the DXY yesterday, from a technical perspective it remains within the rising trend channel established in early September. It would take a further 0.3% decline today for a serious test of major support in the 94-94.10 area.
Today's quiet schedule continues the theme of this week. Politics will be the main focus. President Trump has departed China for Vietnam. Elsewhere, the UK and EU are holding the sixth round of Brexit negotiations. Were it not for the weaker dollar, we think GBP/USD would be challenging 1.30.
> Bottom line. EUR/USD may edge higher, above 1.1650.
> Regional trigger: Сaution on CBR cuts. USD/RUB held a very narrow range yesterday, between 59 and 59.50. In the context of a softer dollar, this is not a particularly impressive performance by the ruble.
In comments yesterday, Igor Dmitriev, the head of monetary policy at the CBR, was once again cautious on the outlook for rate cuts. He said that Russia was now past its period of disinflation, while acknowledging that the regulator may revise its projection for CPI at year end. He also turned down the opportunity to outline the policy options available at the December 15 meeting.
Presidents Putin and Trump are both attending the Asia-Pacific summit in Vietnam. However, officials have played down the possibility of the two leaders meeting in a formal setting. US officials suggest a meeting is not warranted, as there is little chance of progress on key issues. This sums up well the rather stale state of relations and probably also domestic pressure faced by Trump at home.
We will keep an eye on a scheduled decision from 19:00 Moscow time from ISDA on whether Venezuela's PDVSA has defaulted.
> Bottom line. USD/RUB will likely stay in the 59-59.50 range today. Our slight preference is for it to drift higher.