Russia FX Beat - November 24, 2017

> Today's focus. Global markets quiet, US markets close early today.
> Global trigger: Dovish Fed drift. Unsurprisingly, global markets are quiet given yesterday's US holiday. Today, both the US equity and bond markets will close early, so trading volumes will be very thin.
Overall, the tone in markets is relatively upbeat, despite yesterday's sharp 2%+ selloff in China's main equity market. Today, the Shanghai Composite was calmer, closing slightly in the green.
After the message from a speech by Fed Chair Yellen, as well as Fed minutes, turned out to be on the dovish side earlier in the week, the dollar again finished with slight losses yesterday. Markets are already more skeptical about the Fed's plan for tightening next year. The Fed projects three 25 bp hikes, while pricing suggests just two.
Today's schedule is understandably quiet. There are several ECB speakers, and Germany releases its IFO survey at 12:00 Moscow time. Talks in Germany continue over the formation of a new government.
> Bottom line. EUR/USD may hold near 1.1850. EM FX may outperform more liquid, low-yielding currencies.
> Regional trigger: Export flow. Unsurprisingly, ruble volumes traded on MICEX were low yesterday, totaling just $2.5 bln. USD/RUB held in a narrow range of 58.30-58.50.
The biggest November tax deadline is on Monday, with likely over R500 bln of MET and export duties due. Since global trading will be thin today, Russian exporters may have already made most of the FX sales needed to pay taxes. Nevertheless, it is reasonable to expect decent support for the ruble today from exporter sales.
From a highpoint of above 59.50 this week, USD/RUB has declined by close to 2%. This was made possible by an impressive recovery in risk sentiment and oil prices generally grinding higher. At $63.50/bbl, the Brent price is currently at a high for the week. Investors are increasingly turning their attention to the OPEC Summit that will take place in a week.
For the time being, external factors are set to continue determining the ruble's path. Notwithstanding, for example, a bullish OPEC outcome, we are inclined to believe that the swift reversal lower in USD/RUB might soon run out of steam.
> Bottom line. Export flow may push USD/RUB to 58.30.