Cheaper Brent Oil Makes Ruble Weaker Against USD
IFC Markets | Nov 30, 2015 06:50AM ET
Trading commodity currency
The ruble-denominated brent oil chart has significantly diverged once again from its 200-day moving average line. Previously it returned to it. Last time, late October, it failed to touch the average line, but experienced almost a week of steady growth. Now it has reversed up again. Will the uptrend continue?
The proportion of fuel and energy goods in the Russian exports is quite high, amounting to 65%, according to the Federal Customs Service of Russia. This explains the strong inverse correlation of the Russian ruble and the global oil prices. Cheaper oil makes ruble weaker against the US dollar, so the ruble-denominated Brent oil chart tends to fluctuate around its average line. The chart of the ruble and oil percentage change illustrates their inverse correlation. Since early 2015, the oil has lost in price much more than the ruble as ruble was mainly devalued in 2014. The Russian currency is currently supported by the slight economic growth and the moves of the Central Bank. In October, the Russian GDP advanced 0.1%, being positive for the 4th consecutive month. In January-October this year, the GDP lost 3.7% which is slightly above the slump of 4.1% in the first six months. On December 14th, the Central Bank of Russia will resume for one year the currency REPO auctions that were suspended in June. In our opinion, the move may considerably improve the currency liquidity and support the ruble. For the instrument in question, the mentioned factors are negative and may limit its growth. We believe they have already detained the Brent_RUB growth to the 200-day average line. Now the background is more solid for such a case. On December the 4th, the next OPEC meeting will take place, which can result in some measures to support the global oil prices. Their increase is positive for Brent_RUB.
On the daily chart, the &Brent_RUB: D1 is in the downtrend for three months. Two weeks ago is began to correct up from its lower boundary. The Parabolic indicator and MACD have formed the buy signals. RSI is neutral slightly below 50, no divergence. The Bollinger bands® have contracted, which may mean lower volatility. They are tilted upwards. The bullish momentum may develop in case the personal composite instrument surpasses the last fractal at 3163. This level may serve the point of entry. The most risk-averse traders may wait for the break through the upper boundary of the downtrend at 3216. The initial risk-limit may be placed below the Parabolic signal and the last fractal low at 2936. Having opened the pending order, we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level at 2936 without reaching the order at 3163 or 3216, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Get The News You Want
Position Buy Buy stop above 3163 or 3216 Stop loss below 2936
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.