Russia FX Beat - November 3, 2017

> Today's focus. US jobs report and Russian FX intervention.
> Global trigger: Jobs data. Important US economic data comes today in the form of the October jobs report at 15:30 Moscow time. Payrolls are expected to rebound strongly to above 300,000 following September's hurricane-depressed figure. More important will be the average earnings data. Slightly later, at 17:00, the nonmanufacturing ISM survey is released.
Overnight, current Fed Governor Jay Powell was confirmed as President Trump's nomination to lead the Fed starting in February. The news barely registered with financial markets. The Fed is on track to hike on December 13, but it might be difficult for it to raise rates again until maybe even mid-2018.
The US Republican party unveiled its tax reform plan yesterday. Markets were underwhelmed, and the dollar and UST yields slipped. The bill faces a vote in the House of Representatives next week. Experts suggest that tax reform is far from being enacted and doubt it is deliverable within the next six months.
> Bottom line. The British pound was a huge underperformer yesterday, dropping 1.4% in response to the UK rate hike. EUR/USD today will be driven by jobs data. We are neutral.
> Regional trigger: Finance Ministry FX buying to jump. At 12:00 Moscow time, the Finance Ministry will announce its FX intervention plans for the month ahead. We expect a sharp pickup to $105 mln a day or $2.2 bln (R130 bln) for the month. This is based on a ruble Urals price at its highest level since 1Q15. If we are correct with our forecast, interventions would be 70% higher than last month and the highest since they began in February.
The initial reaction to this news might see the ruble move lower, but in the scheme of total daily volumes these interventions are not huge, so they should not impact the ruble in a lasting way. In addition, exporters are likely to accelerate sales of FX in November as a result of high oil prices. For more, please see "Finance Ministry Interventions Set to Rise Sharply," published yesterday.
Russian oil minister Alexander Novak and his Saudi counterpart, Khalid Al-Falih, are to meet today. We think an OPEC+ output cut extension is largely priced in and see little further upside from this theme ahead of OPEC's November 30 summit.
> Bottom line. Ahead of a holiday in Russia on Monday, our bias is for USD/RUB to move above 58.50 today.