Russia FX Beat - September 22, 2017

> Today's focus. North Korea, Draghi speech, German election.
> Global trigger: Draghi speech. The bounce that the dollar enjoyed in the aftermath of Wednesday's Fed decision has largely reversed, as judged by EUR/USD. From its low point near to 1.1850, EUR/USD has now recovered by almost 1%.
Although investors are taking the prospect of a December rate hike more seriously (it is now priced at almost a 65% chance versus 50% prior to this week's announcement), they are yet to be convinced. Further out, investors simply do not subscribe to the view that the Fed can raise rates three times in 2018.
This epitomizes a key risk that we cited prior to the Fed decision: that even if the Fed is hawkish, investors might not believe it. Today, several Fed speakers (Williams at 13:00 Moscow time, George at 16:30 and Kaplan at 20:30) will offer their views. Markets will listen closely.
Elsewhere, ECB President Draghi speaks at 11:30 while UK PM May is due to give a key speech on how to move ahead with Brexit. Lastly, overnight North Korea made renewed threats to the US, with the nation's foreign minister suggesting Pyongyang might detonate a hydrogen bomb in the Pacific.
> Bottom line. EUR/USD looks set to gravitate toward 1.20, although investors might be cautious ahead of Draghi's speech and this weekend's German election.
> Regional trigger: Tax time. The ruble outperformed other EM currencies, helped by a rising oil price that has continued to reach fresh highs so far today. With early trading today taking USD/RUB toward 57.60, the pair is on the cusp of a downside breakout from the uptrend established since September 7. This would warn of further ruble gains toward 57.
USD/RUB has now fully retraced the rise that it experienced into the Fed decision on Wednesday. Ruble inflows are also a result of Monday's major tax payment deadline, for which we calculate around R725 bln is due. Ruble demand might persist today as a result of this.
Today sees a meeting of OPEC countries and partners in Vienna. No major policy change is expected, with the current output cut deal running through to end 1Q18. However, comments from officials are a certainty. The market expects the deal to be extended at an official OPEC summit in November, while Nigeria's oil minister has suggested a Brent target of $60/bbl.
> Bottom line. USD/RUB is poised to break its uptrend, suggesting a move toward 57.50.