Forex Market: USD/RUB daily forecast

During yesterday’s trading session USD/RUB traded within the range of 35.468-35.925 and closed at 35.731, gaining 0.31% on a daily basis.

At 8:22 GMT today USD/RUB was down 0.46% for the day to trade at 35.664. The pair touched a daily low at 35.593 at 7:20 GMT.

Fundamental view

United States

Employers in the US non-farm private sector probably added 230 000 new jobs during July, according to the median estimate by experts, following 281 000 new positions added in June. The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of government’s employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs is considered of utmost importance for consumer spending, while the latter is a major driving force behind economic growth. In case expectations were exceeded, this would bolster demand for the US dollar. The official figure is scheduled to be published at 12:15 GMT.

US preliminary annualized Gross Domestic Product (GDP) probably expanded 3.0% during the second quarter of the year, according to the median forecast by experts, following a 2.9% drop in Q1. The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a country’s economic activity.

The report on GDP holds a lot of weight for traders, operating in the Foreign Exchange Market. It serves as evidence of growth in a productive economy, or as evidence of contraction in an unproductive one. As a result, currency traders will look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, willing to purchase assets in the country, while, at the same time, this will increase demand for the national currency.

If an economy is experiencing a robust rate of growth, the benefits will eventually affect the end consumer, because of the increased likelihood of spending, while through increased consumer expenditures economy has the potential to expand even further. Therefore, in case US growth outpaced expectations, this would heighten the appeal of the greenback. The Bureau of Economic Analysis is expected to release the preliminary GDP estimate at 12:30 GMT.

The Federal Open Market Committee (FOMC) will probably keep its benchmark interest rate unchanged within the range 0-0.25% for a 44th consecutive meeting. In addition, the FOMC members will probably reduce the pace of monthly asset purchases by another $10 billion to $25 billion, according to the median forecast by experts.

Investors and traders keep a close eye on the FOMC’s rate decisions. After each of the eight FOMC meetings, an announcement is made regarding the Fed’s decision to increase, decrease or maintain the cash fund rate.

The FOMC will announce its interest rate decision and pace of monthly asset purchases at 18:00 GMT. In case, the central bank’s policy makers cut the monthly asset purchases by $10 billion, in line with expectations, this would certainly support demand for the dollar.

According to MarketWatch, at today’s meeting the Federal Reserve may introduce hints as to when it intends to raise interest rates for the first time in a while, as the bank has been moving towards the exit of the third round of its Quantitative Easing (QE3) since the policy meeting in December 2013.

More severe sanctions against Russia

The US and EU intensified sanctions against Moscow on Tuesday, with the US banning trade with three Russian banks, while the detailed list of EU’s measures is expected later today, and will include defense, energy, finance and high-tech trade curbs, as well as more asset freezes and travel bans to individuals. These measures mark the beginning of a new phase of the largest confrontation between the Russian Federation and the Western world since the end of the Cold War.

The latest round of sanctions comes in light of the downing on Malaysian passenger jet, flight MH17, which was shot down over rebel-held territory in eastern Ukraine. The West has accused the rebels for the act, and Moscow for supplying the insurgents with the weaponry. The Kremlin has denied any involvement and has instead put the blame for the incident on the Ukrainian military.

US President Barack Obama said on Tuesday that the measures would take an “even bigger bite” out of the stagnant Russian economy compared to sanctions Washington and the European Union had already implemented against the Federation over its disputed annexation of Crimea.

“The major sanctions were announcing today will continue to ratchet up the pressure on Russia including the cronies and companies supporting Russias illegal activities in the Ukraine,” Obama said from the White House South Lawn, cited by CNN. “In other words, today Russia is once again isolating itself from the international community, setting back decades of genuine progress.”

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 35.708. In case USD/RUB manages to breach the first resistance level at 35.949, it will probably continue up to test 36.165. In case the second key resistance is broken, the pair will probably attempt to advance to 36.405.

If USD/RUB manages to breach the first key support at 35.490, it will probably continue to slide and test 35.251. With this second key support broken, the movement to the downside will probably continue to 35.034.

The mid-Pivot levels for today are as follows: M1 – 35.143, M2 – 35.371, M3 – 35.600, M4 – 35.828, M5 – 36.057, M6 – 36.285.

In weekly terms, the central pivot point is at 35.099. The three key resistance levels are as follows: R1 – 35.438, R2 – 35.743, R3 – 36.082. The three key support levels are: S1 – 34.794, S2 – 34.455, S3 – 34.150.