Ella 
In the Asian market on Wednesday, USD/RUB fell slightly above the 94.50 mark after retreating from a 16-month high of 102.35. Meanwhile, the U.S. dollar index (DXY) fell to 103.50 as markets turned cautious ahead of the Jackson Hole seminar and speeches by Federal Reserve Chairman Jerome Powell on Thursday and Friday .
On Tuesday, Russian President Vladimir Putin said risks to inflation were growing, urging the government and central bank to remain stable. Still, Ukraine’s military action has weighed on Russia’s balance sheet, with the central bank having to raise interest rates last week to prevent the ruble from collapsing. Notably, the Russian central bank raised interest rates by 350 basis points (bps) to 12% last week.
The Russian government is grappling with a conflict with Ukraine, which has led to increased military procurement and misallocation of funds. In the first half of 2023, Russia’s current account surplus fell by 85%.
In addition, according to the Sputnik news agency, Putin added that Russia has surpassed the Federal Republic of Germany in terms of purchasing power parity and economic size, and has become one of the top five in the world.
In the U.S. dollar, investors raised bets on further rate hikes by the Federal Reserve despite strong labor data and soft inflation data last week. A speech by Federal Reserve Chairman Jerome Powell on Friday will serve as a guide for investors, and Fed Chairman Jerome Powell is likely to issue views on the state of the economy. A hawkish bias from Fed Chairman Powell could boost USD/RUB and constitute a “tailwind” for USD/RUB.
Moving forward, market participants will be keeping a close eye on news surrounding the Russia-Ukraine war. Later in the US session, US S&P Global Purchasing Managers Index (PMI) data will be released. The focus of the week will be Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday. Traders will take cues from the data and look for USD/RUB trading opportunities there.
