USD/RUB struggles around four-year low under 60.00 with eyes on CBR moves, US GDP

• USD/RUB grinds higher after bouncing off multi-year low.
• Russian central bank calls for an emergency meeting on Thursday.
• Russian bondholders fear Moscow’s default on some foreign currency debts.
• US dollar reverses losses made after Fed Minutes amid fears of global recession.

USD/RUB fades bounce off the lowest levels since 2018 even as traders fear default of Russia's debt. The reason could be linked to the market’s anxiety ahead of the Russian central bank’s emergency meeting. That said, the Russian ruble (RUB) pair drops 1.30% around 59.52 heading into Thursday’s European session.

That said, the Central Bank of the Russian Federation (CBR) has called an emergency monetary policy meeting, for Thursday, to rein the ruble prices that rallied too far since early March. “An unscheduled policy meeting for Thursday has spurred expectations for a big reduction, and the possibility that capital restrictions may be loosened further,” said Bloomberg ahead of the meeting.

Also adding to the bullish bias for USD/RUB are the concerns over Russia’s debt default.  “Russia could already be in default on some of its foreign currency debts, according to bondholders that claim they are still owed a small interest payment that Moscow didn’t send to them earlier this spring,” per the Wall Street Journal (WSJ).

Elsewhere, the US Dollar Index (DXY) picks up bids to refresh its daily top around 102.25. In doing so, the DXY reverses the previous day’s losses after the Fed Minutes raised doubts on the 50 bps rate hike trajectory post-September.

The underlying reasons could be linked to the escalating market fears of global recession, as well as growing pessimism surrounding China and Russia. The comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’,” become a fresh threat to the US-China trade relations. Previously, Beijing criticized the US Draft Security Council resolution on North Korea and added strength to the Sino-American tensions. Also negative from China are the covid-led lockdowns that weigh on the world’s second-largest economy.

On the other hand, World Bank President David Malpass said, “Russia's war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession."

Additionally, the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, will join the US Personal Consumption Expenditure (PCE) details for April and weekly jobless claims, which will also be important for USD/RUB traders.

Technical analysis

A 12-day-old descending trend line resistance, around 61.62 by the press time, guards immediate recovery of USD/RUB. On the contrary, a downward sloping support line from early April, close to 53.80, lures the bears. Overall, bears keep the reins but run out of steam of late.