Global macro overview for 10/04/2018

It may seem that Monday will not be a particularly exciting trading day as there were basically two important readings: Germany's foreign trade for February (exports and imports were clearly disappointing) and the Sentix index for the Euro Zone. This slightly disappeared from the forecasts as it dropped from 24 points not to 20.3 points, but to 19.6 points.

These facts, however, were not groundbreaking. There were a few other news items on the geopolitical side. The US has tightened economic sanctions for Russia, in particular involving 14 companies and 24 businessmen (personally). Official reasons are always the same: Russia is supposed to lead a harmful international policy, including in Syria or Ukraine (in Donbass). In any case, after these decisions, the ruble fell sharply on value and the MOEX Russia Index plunged 8.3% - the biggest one day fall since the 2014 Crimean crisis.

The sell-off is driven by rising geopolitical tension and rapidly escalating concerns amongst investors that more Russian companies could be targeted by the US. Speaking this morning Bank of Russia Governor Nabiullina acknowledged that the new wave of US sanctions caused the market to fall and increased volatility. She also said that it takes time for the markets and the economy to adjust to those measures. Nabiullina added that the CBR has a wide range of tools to address the risks, but at this stage, there is no threat to Russia's financial stability.

Let's now take a look at the USD/RUR technical picture at the daily time frame. The recent spike up has broken through the 23% Fibo at the level of 62.40 and made a high at the level of 63.61. The nearest technical support is seen at the level of 60.70 and 60.10 and the next target for bulls is seen at the level of 66.15. Please notice, that the market has entered the oversold conditions, so the corrective pull-back is being expected now.


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