Article / 15 December 2014 at 9:24 GMT

From the floor: 'One-way ticket' USDRUB gets closer to 60

Former managing editor, TradingFloor.com / Saxo Bank
Denmark
Editor’s note: From the floor takes advantage of TradingFloor.com's unique real-time access to Saxo Bank’s various trading floors around the globe to put our community in touch with the developments that matter to their portfolios.

  • RUBUSD "one way ticket" says Arkouzis Dahlerup, as pair hits new record
  • Australian hostage situation shuts much of Sydney CBD but AUDUSD stable
  • Abe victory in line with expectations, but fillip for JPY shortlived
  • FOMC meeting to drive markets later this week, says Van-Petersen
  • Oil continues to drift as WTI hits low of $56.25/b
  • USDCAD one-month atm volatility could see "move higher," says Larsen
  • Short European equities versus long US "way to play" market, says Van-Petersen

By Martin O'Rourke

Headed for 60

USDRUB's inexorable march towards 60 and beyond came yet another step closer during the Asian trading session to hit a new record of 58.5593. 

The ruble is "a one-way ticket," says the FX Option Desk's Nana Arkouzis Dahlerup. USDRUB is currently at 58.5128 at 0914 GMT, just shy of the fresh record.

Hostage attack

The ongoing hostage situation in Sydney is still unfolding, but much of the central business district is shut down, including the Reserve Bank of Australia which has its office in the neighbourhood, says the Singapore trading floor's Christoffer Moltke-Leth. 

Moltke-Leth says AUDUSD fell 30 pips as the crisis unfolded to hit a low of 82.05 "but then recovered most of the losses ." The government has also delayed a fiscal report while it deals with the crisis, said to involve one ISIS-supporting gunman.

Abe wins

Japanese prime minister Shinzo Abe has won another term as expected and by the kind of landslide that he would have hoped for as a mandate for his policies. Any benefit for JPY has been shortlived though as gains against the dollar were later by and large given up, says Moltke-Leth.

USDJPY volatilities "came off" in the aftermath says the FX Option Desk's Dan Larsen, speaking live from the Copenhagen trading floor. 

Larsen points towards an interesting development for in USDCAD one-month at-the-money volatilities. "These seem at a relatively high level if we look back over the last two years," says Larsen, "but compared to the period before that, they are still relatively low."

"There could be upside in USDCAD vols with a move higher possible," he says. He adds that Opec's decision not to help oil dependent currencies could also impact CAD and sees "117 as the resistance point" with potential "for a 130 triple-top from 2008/09 also a possibility."

In your diary

It's not usually From the floor's remit to look too far ahead but Wednesday's Federal Open Market Committee meeting is looming large. 

"This is the key event ahead, people will be watching very closely" says Singapore's Asia macro strategist Kay Van-Petersen, adding that people will be watching to see if the Fed takes a hawkish line after a raft of strong US data.

"Buyers could be lurking around the $1,200/oz area for gold depending on the outcome of the FOMC," says Saxo Bank's head of commodities strategy Ole Hansen.

It's a similar story in bonds where the FOMC is expected to dominate the agenda, says the Fixed Income desk's Michael Boye.

Oil drift continues

WTI oil slipped yet further to $56.25/barrel overnight before recovering some of that 2.5% fall. "Hedge funds are buying into the selloff in oil, covering the shorts and adding a bit to the long side," says Hansen. 

"They are looking for a bottom in the market and while that strategy has not been profitable for the last two weeks when oil slumped 20%, it does indicate there is no aggressive willingness to add to existing shorts," he says.

An equities play

Van-Petersen meanwhile continues to advocate a short European, long US equities strategy.

"There is a very big pullback in riskoff especially in European equities but I still think that going into the end of the year, short European equities versus long US equities is the way to play it," he says.

Van-Petersen points to the raft of strong data out of the the US compared to Europe's more fragile data based largely on the promise of QE, the long wait until the next ECB meeting on January 22 and DAX's outperformance of the S&P since the low of October 15.

"I'm looking for technical or tactical pop-ups in EURUSD and am looking to make some Puts at  121/22 strikes."'

Bunds going again

Bunds are trading "just shy of record territory," at 154.65, says Boye, adding that Greece remains critical with the Greek presidential elections about to take place.

irk
 What will the ruble get you today in Russia? Photo: Thinkstock


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Martin O'Rourke is managing editor at Saxo Bank's TradingFloor.com – the home of social trading
4y
Martin O'Rourke Martin O'Rourke
USDRUB has hit a new record of 58.8033
4y
Martin O'Rourke Martin O'Rourke
USDRUB has hit a new record of 61.4595 today. At 1332 GMT, it was trading at 60.5372, 3.87% up on the day.
4y
Artie Artie
Rouble is a case when russians don't need a competitor (or enemy) when they have such central bank)
4y
Martin O'Rourke Martin O'Rourke
USDRUB has now hit a fresh high of 69.3025 and the slide towards 70 now seems inexorable. On November 7, the FX Desk's Kim GrØnlund trailed in From the floor that the ruble was "on the road to 50." https://www.tradingfloor.com/posts/from-the-floor-eur-trembles-ruble-quakes-2379392 Six weeks later, that looks like a far and distant crossroad that the Central Bank of Russia can only dream about.
4y
LION KING LION KING
EUR/RUB goal 91

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