Russia FX Beat - October 24, 2017

> Today's focus. Quiet before ECB, CBR, Catalonia, US GDP.
> Global trigger: Quiet day in store. Risk sentiment slightly soured yesterday, with most currencies lower against the dollar and the S&P 500 declining 0.4%, its first drop in seven sessions.
Today looks set to be relatively calm. The Fed has entered its blackout period ahead of next week's rate decision, while President Trump said yesterday that he was "very, very close" to announcing his nominee to be the next Fed chair.
Markets may well stay subdued until later this week, when things should start to pick up. Of the greatest significance is the ECB decision on Thursday (see our preview, "QE Plans for 2018 to be Unveiled," published yesterday). That same day, we will probably see the next installment in the Catalonia situation, as well. On Friday, the US will release 3Q GDP data.
> Bottom line. EUR/USD is stuck near 1.1750 and unlikely to move decisively from there today.
> Regional trigger: Taxes and dividends. The ruble was well supported yesterday. Healthy selling of FX by exporters helped the currency to hold its own against a rising dollar. Tomorrow is the deadline to pay most of the over R700 bln in MET, VAT and excise duty taxes due this month.
As we noted yesterday, today is also a heavy day in terms of remaining ruble interim dividends, with about $2 bln scheduled to be paid. Later in the week, this may lead to demand for FX as recipients convert dividends into hard currency.
Today, we published our preview of Friday's CBR decision ("Looking for a Quarter-Point Cut"). As the title suggests, we expect a 25 bp cut to 8.25%, in line with the consensus. As indicated by comments from the CBR, if there is a risk to this view, it is that the central bank delivers a larger 50 bp reduction. If there is a market reaction at all to a 25 bp cut, it will be because of the accompanying statement.
> Bottom line. USD/RUB is trading in a narrow range, seeking a new catalyst. From a technical perspective, USD/RUB will soon face a test of resistance in the 57.80 area. The main risk to our year-end forecast of 60 is a hawkish CBR triggering renewed flows into OFZs.