Forex Market: USD/RUB daily trading forecast

Yesterday’s trade saw USD/RUB within the range of 35.925-36.119. The pair closed at 36.081, losing 0.08% on a daily basis.

At 7:19 GMT today USD/RUB was up 0.15% for the day to trade at 36.130. The pair broke the first key daily resistance level and touched a daily high at 36.191 at 5:30 GMT.

Fundamental view

United States

The annualized index of consumer prices (CPI) in the United States probably remained steady at 2.0% in July, according to market expectations. In monthly terms, the CPI probably increased 0.1% last month, following another 0.3% gain in June.

The CPI is based on a basket of goods and services bought and used by consumers on a daily basis. In the United States the Bureau of Labor Statistics (BLS) surveys the prices of 80 000 consumer items in order to calculate the index. The latter reflects prices of commonly purchased items by primarily urban households, which represent about 87% of the US population. The Bureau processes price data from 23 000 retail and service businesses.

The CPI includes sales taxes, but excludes income taxes, prices of investments such as stocks and bonds and sales prices of homes.

The annualized Core CPI, which excludes prices of food and energy, probably remained unchanged at 1.9% in July. It is usually reported as a seasonally adjusted figure, because consumer patterns are widely fluctuating in dependance on the time of the year. The Core CPI is a key measure, because this is the gauge, which the Federal Reserve Bank examines in order to adjust its monetary policy. The Fed uses the core CPI, because prices of food, oil and gas are highly volatile and central bank’s tools are slow-acting. In case prices of gas surge considerably, this could lead to a high rate of inflation, but the central bank will not take action until this increase affects prices of other goods and services.

If the CPI tends to approach or comes in line with the inflation objective, set by the Federal Reserve and considered as providing price stability, or 2%, this will usually support demand for the US dollar. However, quite high rates of inflation (well above central bank’s inflation target) can be harmful to economy and as a result, this may lead to the loss of confidence in the local currency.

The Bureau of Labor Statistics is to release the official CPI report at 12:30 GMT.

The number of housing starts in the United States probably rose to 0.970 million in July from 0.893 million during the prior month. Housing Starts represent a gauge to measure residential units, on which construction has already begun, every month. A start in construction is defined as the foundation laying of a building and it encompasses residential housing primarily.

The number of building permits in the country probably increased to 1.000 million in July compared to a month ago, according to the median estimate by experts. In June permits, issued by the government, have been revised up to 0.973 million units from 0.963 million units, as reported previously.

Building permits are permits, issued in order to allow excavation. An increase in the number of building permits and housing starts usually occurs a few months after mortgage rates in the country have been reduced. Permits usually lead housing starts, but are not required in all regions of the United States. Building permits, as an indicator, provide information regarding demand in US housing market. A higher than anticipated number would support the greenback. The official data by the US Census Bureau is due out at 12:30 GMT.

Russian Federation

The rate of unemployment in the Russian Federation probably climbed to 5.0% during July from 4.9% in June. The unemployment rate in the country has been falling since February, when it stood at 5.6%.

This indicator represents the percentage of the eligible work force which is unemployed, but is actively seeking employment. It reflects overall economic state in the country, as there is a strong correlation between consumer spending levels and labor market conditions. Low rates of unemployment are accompanied by increased spending, which causes a favorable effect on corporate profits and also leads to overall growth acceleration. Therefore, lower than projected rates of unemployment would support demand for the ruble. The Federal State Statistics Service will release its official report at 12:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 36.042. In case USD/RUB manages to breach the first resistance level at 36.158, it will probably continue up to test 36.236. In case the second key resistance is broken, the pair will probably attempt to advance to 36.352.

If USD/RUB manages to breach the first key support at 35.964, it will probably continue to slide and test 35.848. With this second key support broken, the movement to the downside will probably continue to 35.770.

The mid-Pivot levels for today are as follows: M1 – 35.809, M2 – 35.906, M3 – 36.003, M4 – 36.100, M5 – 36.197, M6 – 36.294.

In weekly terms, the central pivot point is at 36.073. The three key resistance levels are as follows: R1 – 36.336, R2 – 36.557, R3 – 36.820. The three key support levels are: S1 – 35.852, S2 – 35.589, S3 – 35.368.