Russia FX Beat - November 2, 2017

> Today's focus. Powell to be new Fed Chair. BoE rate hike.
> Global trigger: Powell gets the nod. The Fed decision last night was a nonevent, with rates left unchanged at 1.25%, as expected. In addition, the accompanying statement was changed but only immaterially. Markets remain convinced that the US will raise rates by 25 bps at the final meeting of the year on December 13, pricing in a 90% likelihood.
Instead, the focus was, and still is, on President Trump's announcement, expected today, of his nominee for Fed chair, whose term will start in February. If press reports are to be believed, current Fed Governor Jerome Powell will be selected.
Powell offers continuity and his nomination would not imply any change to the medium-term outlook for US rates. He has not dissented from a Fed decision since 2012.
Following their latest meetings, the outlook for Fed and ECB policy going into year end looks to be rather benign for risk sentiment.
Attention today turns to the UK, where the BoE is set to raise rates for the first time in 10 years (15:00 Moscow time). In the US, Republicans will release their tax reform bill and - interestingly - Fed governors Powell (15:30) and Dudley (19:20) speak.
> Bottom line. EUR/USD might push toward 1.17 once Powell is confirmed as the Fed chair nominee.
> Regional trigger: EM FX buoyed. Weekly Russian CPI, released yesterday, returned to flat growth. Based on this narrow measure, prices rose 0.2% in October. If this is mirrored in the full monthly CPI report (due early next week), y-o-y CPI will fall below 3%. As we noted yesterday, however, we expect the CBR to ease rates by just 25 bps on December 15.
The ruble traded in a relatively narrow range yesterday. Oil prices edged lower, but it is clear that $60/bbl will be an important support level for the Brent price going forward.
News from the US about Powell's nomination should be supportive for EM FX, including the ruble. This might be the dominant theme today, potentially pushing USD/RUB lower toward the 57.80 mark.
This could be an opportunity to buy USD/RUB, with Finance Ministry FX purchases set to pick up this month, which should be confirmed tomorrow.
> Bottom line. The USD/RUB momentum built since mid-October has stalled below 58.50. For today, we see the risk of USD/RUB dipping below 58 toward 57.80.