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Japan’s Inflation Edges Higher in October as BOJ Faces Growing Pressure to Hike Rates 
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UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
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Global Markets React to Strong U.S. Jobs Data and Rising Yields 
BOJ Seen Moving Toward December Rate Hike as Yen Slides 
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RBA Signals Possible Rate Implications as Inflation Proves More Persistent 
Indonesia Aims to Strengthen Rupiah as Central Bank Targets 16,400–16,500 Level 
As stated in our previous post, CBR’s indication of hikes has cushioned ruble depreciation.
Resumption of FX purchases will prove bearish for RUB, in our view. The CBR announced the resumption of FX purchases from January 15th. This is likely to weigh meaningfully on RUB, in our view, with the current account support much smaller.
The ruble rallied through January, and USDRUB briefly fell near the 66 mark last week. But this rally stopped after CBR stepped up FX purchases: from 1 February, CBR will mop up additional 18% dollars from the market than what they have been doing in recent months. This increased rate of purchase will make up for the period August-December 2018 when FX purchases were suspended because the oil price came under pressure; the increased monthly volume will continue for 36 months assuming that calm conditions will prevail.
Over this period, the additional purchases will total $32bn. The volume is not negligible, of course, but in our view, the currency will be more affected by whether or not CBR continues to hike rates this month. Beyond the initial market reaction following the announcement, we do not anticipate the FX purchases to have an effect on USDRUB.
Options Trade Tips (USDRUB): At spot reference: 66.056 levels, we maintain our 3m 1x1 USDRUB (65/71) call spread. We may have been a bit early with this trade as the resumption of purchases was now announced only for January 15th, after the expiry of our option. Yet, amid global EM risks and negative RUB seasonality around the year-end, we still see a good chance RUB will weaken in anticipation of the budget rule headwind within the remaining maturity of the trade. Courtesy: JPM & Commerzbank
Currency Strength Index: FxWirePro's hourly USD is inching at -113 (which is bearish), while articulating (at 13:31 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
