FX Weekly Insights — 11/10/21

Key Events

Tuesday

Fedspeak Clarida

Wednesday

JP Morgan Chase Earnings Report
12:30 (US) – CPI ex Food & Energy (YoY) (Consensus 4%, Previous 4%)
12:30 (US) – CPI ex Food & Energy (MoM) (Consensus 0.2%, Previous 0.1%) 18:00 (US) – FOMC minutes

Thursday

00:30 (AU) – Unemployment Rate (Sep) (Consensus 4.8%, Previous 4.5%) 12:30 (US) PPI ex Food & Energy (YoY) (Consensus 0.2%, Previous 0.1%)

RUB on the Ground

Most players are short USD/RUB now. The main arguments for a stronger RUB is if prices remain high for oil and gas, also the high probability of another rate hike at the next CBR meeting on October 22nd (RUB is probably the most attractive carry trade story across all EMs, and watch for the possible left-hand side conversion from exporters). The negative factors to watch remain the huge daily FX purchases by the CBR with accumulative effect, wider core rates and an overall shaky sentiment in emerging markets. Technically, a critically important level to look out for remains 71.50 (low of the last year).

Key Points

- Stagflation narrative emerging

- Volatility index increasing a boon for FX

- CAD strong employment numbers & oil prices spiking – Will the BoC taper?

Charts of the Week - AUD/NZD &CAD/JPY

Resistance: 1.0580

Resistance: 91.20

Key Stories arriving next week