Russia FX Beat - September 19, 2017

> Today's focus. Risk scaled back ahead of Trump and Fed.
> Global trigger: Trump address. EUR/USD looks to have settled into a range ahead of tomorrow's Fed decision. In our preview ("Quantitative Tightening Set to Start," published today), we outline our expectations for the meeting. Rates will be left at 1.25%, leaving the focus on updated rate projections and the anticipated announcement about when quantitative tightening will start. We think the Fed will keep to its forecast of one hike before year end but reduce its forecast from three to two hikes for 2018. We also think that quantitative tightening will start from October 1.
Today's agenda is light. The German ZEW survey (12:00 Moscow time) will provide an update on investor sentiment ahead of parliamentary elections this coming weekend. The US will release August housing starts and 2Q current account data at 15:30; neither should be market-moving.
Of the most interest today will likely be President Trump's first address to the UN General Assembly. Topics will range from his "America First" policy to dealing with the threat from North Korea.
> Bottom line. EUR/USD is likely to edge back toward 1.1950.
> Regional trigger: Oil testing highs. The ruble participated in the general decline of EM currencies against the dollar yesterday. We attribute this to position-trimming ahead of the Fed decision tomorrow.
As a result, today's CBR daily fix for USD/RUB of 57.62 is notably below the spot rate, which is nearer to 58. This should result in decent selling of FX by exporters today, especially with this month's tax period approaching (over R700 bln is due for payment on September 25).
Brent prices continue to hold just below $56/bbl, their highest level since April. Should the Fed meeting prove dovish, forcing the dollar sharply weaker, this could be the trigger that pushes oil prices higher. That, in theory, would be particularly supportive for the ruble. Today sees API US oil inventories, ahead of EIA stocks data tomorrow.
> Bottom line. Absent the expected demand for rubles from exporters mentioned above, USD/RUB looks inclined to edge higher. There is little from a technical perspective to prevent USD/RUB from testing resistance in the 58.35-58.4 area.