Russia FX Beat - October 18, 2017

> Today's focus. ECB and Fed speakers, China GDP overnight.
> Global trigger: Taylor tantrum? The dollar was moderately higher against most currencies yesterday, although EUR/USD remains trapped within a 1.17-1.19 range.
Support for the dollar is coming from the perception that, following his interview with President Trump last week, John Taylor may be appointed the next Fed chair. In remarks yesterday, Trump said he would name his choice in a "short period," which is expected to mean before November 3, when he starts an 11-day overseas trip.
Today sees several ECB and Fed officials speak, including ECB President Draghi at 11:10 Moscow time. New York Fed President Bill Dudley speaks at 15:00. The Fed releases its Beige Book at 21:00. In addition, US housing starts is due and China will release 3Q GDP data overnight. GDP growth, in y-o-y terms, is expected to stay below 7%, after coming in at 6.9% in 2Q.
> Bottom line. The dollar is rather lacking direction against other major currencies. Next week's ECB decision is the major event risk on the horizon and investors will likely pare back risk ahead of it.
> Regional trigger: CBR says rate cut on its way. Yesterday, we suggested that First Deputy Governor Yudaeva had probably provided the last comments from a CBR official ahead of its black-out period prior to the October 27 decision. We were wrong: Igor Dmitriev, head of the Monetary Policy Department, followed up with his own remarks yesterday, saying that the CBR was likely to consider cuts of 25 bps and 50 bps to its 8.50% key rate.
There is not much to say other than that a rate cut looks assured. Barring a major change in market conditions, our view is that the CBR will opt for a 25 bp cut. This would be more consistent with the CBR's relatively hawkish rhetoric that inflation is set to pick up.
Russia releases a slew of data for September at 16:00 today, including labor, retail sales and wage statistics. It also publishes the weekly CPI, which has seen five straight flat readings. The US releases weekly DOE EIA oil statistics at 17:30. The Bloomberg consensus expectation is for a 3.3 mln bbl decline. Overnight, API data showed a steep 7.1 mln bbl draw.
> Bottom line. USD/RUB is steady but, on balance, is trading with a downward bias. Trend support is in the 57.00-57.10 area, with a break beneath this warning of further ruble gains.