USD/RUB: Ruble bears eye fresh YTD low even as Wagner group abandons Russia mutiny

• USD/RUB remains firmer at the highest levels since April 2022, pares the first weekly loss in four.
• Wagner mercenaries retreat towards Belarus after a deal with Moscow to avoid mutiny.
• Softer Oil price also exerts downside pressure on Ruble.
• US Dollar struggles to defend the weekly gains ahead of inflation clues, central bankers’ speeches.

USD/RUB picks up bids to extend the previous day’s rebound from the 50-DMA support heading into Monday’s European session. With this, the Russian Ruble (RUB) pair justifies the market’s lack of confidence in Russian President Vladimir Putin even after a mercenary group dropped their mutiny towards Moscow. Also weighing on the RUB price could be the downbeat performance of the Oil price, Russia’s main export item.

“Russia sought to restore calm on Monday after an aborted mutiny by Wagner Group mercenaries over the weekend, while Western allies assessed how President Vladimir Putin might reassert authority and what it could mean for the war in Ukraine,” said Reuters.  The news also states that the Wagner fighters withdrew from the southern Russian city of Rostov and headed back to their bases late on Saturday under a deal that guaranteed their safety. 

On the other hand, WTI crude oil remains indecisive around $69.50, after posting the biggest weekly loss since early May, amid fears of China’s economic growth, despite risk-positive headlines suggesting more stimulus from Beijing. That said, global rating agency S&P recently cut China’s Gross Domestic Product (GDP) growth forecasts for 2023 to 5.2% from 5.5% previous estimations. In doing so, the black gold ignores hopes of more Oil demand and supply crunch, backed by OPEC and Russia catalysts.

Elsewhere, US Dollar Index (DXY) pares the first weekly gain in four around 102.70 as it bears the burden of mild optimism surrounding China and receding geopolitical fears from Russia. Furthermore, consolidation ahead of this week’s US inflation clues and central bankers’ speeches also exerts downside pressure on the DXY.

It’s worth noting that Fed Chair Jerome Powell’s testimony during the previous week renewed hawkish bias about the US Federal Reserve’s (Fed) move. On the same line were upbeat US PMIs and comments favoring two rate hikes from Federal Reserve Bank of San Francisco President Mary Daly.

While portraying the market’s mood, the S&P500 Futures rebound from the lowest levels in a week toward regaining the 4,400 round figure, up 0.20% intraday near 4,398 at the latest. That said, the US 10-year Treasury bond yields remain sidelined near 3.73%, after snapping a two-week downtrend, whereas the two-year counterpart braces for the fourth consecutive weekly winning streak near 4.74% by the press time.

Looking ahead, geopolitical headlines will join the US inflation clues and multiple central bankers’ speeches at the European Central Bank (ECB) Forum to determine weekly moves of the USD/RUB pair.

Technical analysis

A clear U-turn from the 50-DMA support of around 80.90 joins bullish MACD signals to direct USD/RUB bulls toward refreshing the yearly peak, currently near 85.50.