Yesterday’s session in the Russian exchange market was the complete reverse of Tuesday’s. RUB kicked off on a stronger footing, with USDRUB stepping down to 55.30, from 55.60 at the opening. Stable crude oil helped to buoy risk sentiment in commodity-based currencies in the first half of the day, while expectations of a ‘last minute-last second’ deal for Greece underpinned EM and other risk assets in general.
However, it was a day of conflicting Greek headlines, with reports that Prime Minister Alexis Tsipras had accepted the position of the official creditors. As it is, Tsipras said on Greek television that the referendum would go ahead on Sunday and urged voters to say ‘No’ to the proposals. There is bound to be further dramas before this Greek saga concludes. There are bound to be further dramas before this Greek saga concludes. In the meantime, the focus shifts today to the US nonfarm payroll report, a day earlier than usual because of the US Independence Day holiday.
Thus, in the end, the crude market turned a corner with Brent nearest futures closing 2.5% in the red at USD 62.0/bbl as OPEC’s supply hit a three-year high of 31.6mmb/d in June. In light of this, NOK declined 1.0%, while the average EM FX slipped 0.5-0.6%. However, we think the latter was to a large extent driven by EURUSD dipping to 1.105. Subsequently, RUB lost 0.9% against USD to close at 55.84.