All news
Rising inflation expectations in Russia and strengthening dollar ahead of US elections. Financial market review for October 16
Rising Inflation Expectations in the Russian Federation and Strengthening Dollar Ahead of US Elections. Financial Market Review for October 16
The market is reacting by strengthening the US currency, believing that the chances of Republican candidate Donald Trump to win will increase. A rate cut is expected at the next ECB meeting.
The Chinese yuan exchange rate fell on the Moscow Exchange during the trading session on Wednesday. By 19:00 Moscow time, the Chinese yuan exchange rate was 13.53 rubles, which is 5 kopecks lower than the previous closing level. The official exchange rate of the US dollar against the ruble, announced by the Bank of Russia on October 17, increased by 0.24 rubles, reaching 97.26 rubles. The official exchange rate of the euro against the ruble, announced by the Bank of Russia on October 17, increased by 0.41 rubles, reaching 106.08 rubles.
The Central Bank of Russia calculates the official exchange rate based on reporting data from credit institutions and the results of interbank conversion transactions on the over-the-counter foreign exchange market.
On the global currency market, the dollar index against six major currencies DXY rose and at 20:30 Moscow time was around 103.5 points.
UBS said the dollar is strengthening as the US presidential election approaches as the market sees a growing chance of Republican candidate Donald Trump winning.
A new positive for the US dollar last week was media reports that Donald Trump's outlook had improved slightly in recent opinion polls, as the implications of policies such as more aggressive tariffs are seen as more positive for the dollar.
Markets are confident that the ECB will cut rates by a further 25 basis points at its meeting on Thursday.
Market expectations do not suggest any surprises, and the change in the risk of a euro reversal suggests markets are already pricing in further weakness in the single currency, banking experts say.
The trading session on the Moscow Exchange ended with a decline in the main indicators. The Moscow Exchange Index closed at 2781 points, down 0.8%. The RTS Index closed the trading session at 901 points, down 1%.
Inflation expectations of the Russian population rose to 13.4% in October from 12.5% in September, which was the highest growth since December 2023, according to data from an InFOM study commissioned by the Bank of Russia.
The population inflation estimate rose to 15.3% in October from 14.4% in September. The survey was conducted from September 30 to October 10, 2024.
The growth of inflation expectations by almost 1 percentage point per month may add supporters to the version of an immediate increase in interest rates by the Bank of Russia from the current 19% to 21%.
The next meeting of the central bank's board on monetary policy is scheduled for October 25. That is, in addition to issuing a press release and holding a press conference with the chairman, the Bank of Russia will also present medium-term macroeconomic forecasts. Inflation expectations are one of the important factors that central banks take into account when setting interest rates.
The main US stock indexes showed mixed dynamics in the first half of trading. By 20:30 Moscow time, the Dow Jones industrial index rose by 0.5%, the S&P 500 index by about 0.3%, and the Nasdaq-100 index fell within 0.1%.
Oil prices were little changed late Wednesday. By 20:30 Moscow time, the price of a Brent crude futures contract on London's ICE Futures Exchange was about $74.50 a barrel. At that time, the price of a WTI crude futures contract traded on the New York Mercantile Exchange was about $70.50 a barrel.
Tensions between Israel and Iran remain high, and further increases could support oil prices. US officials expect Israel to retaliate by November 5 for attacks on Iran earlier this month, sources told CNN.
The development could draw attention to growing instability in the Middle East just days before the U.S. presidential election. The timing and terms of Israel's response to Iran are being discussed internally within the Israeli government and are not directly related to the U.S. election, the sources said.