RUSSIA: CBR Policy Statement Tones Down Hawkish Rhetoric

• Fed Funds implied rates are back little changed on the day to sit in the middle of yesterday’s range.
• Cumulative cuts from 4.33% effective: 4bp May, 17.5bp Jun, 28.5bp Jul, 43bp Sep and 62.5bp Dec.
• A sharp drop in consumer confidence in yesterday’s Conference Board survey helped extend a dovish move away from latest post-FOMC highs, but there are still 4.5bp fewer cuts for 2025 than pre-PMI levels following Monday's service PMI beat.  
• Today’s notable data is limited to durable goods whilst Fedspeak comes from traditionally more hawkish members. The latter starts with Minneapolis Fed’s Kashkari (’26 voter) in an event that could limit headlines before more detail from St Louis Fed’s Musalem (’25 voter, one of most hawkish on FOMC).
  • 1000ET – Kashkari hosts a Fed Listens event (Q&A only). It’s been a while since he last spoke, saying Feb 7 that “We’re in a very good place to just sit here until we get a lot more information on the tariff front, on the immigration front, on the tax front… I would expect the federal funds rate to be modestly lower at the end of this year.”
  • 1310ET – Musalem speaks on the economy and monetary policy (text + Q&A). He was one of the hawks who pre-FOMC subtly floated rate hike potential. He spoke on Feb 20 of a core scenario in which "monetary policy remains modestly restrictive until inflation convergence is assured, at which point the policy rate can be gradually reduced toward the neutral level as convergence progresses", but "I perceive the risk that progress on inflation could stall as being greater than the risk of substantial labor market weakening", and he noted a scenario where a more restrictive policy path could be appropriate.

• EURGBP is holding on to the bulk of this morning’s rally, currently up 0.35% on the session as we approach the Spring statement. As noted, the prospect of deeper fiscal spending cuts and slightly softer-than-expected (on net) CPI data have weighed on sterling.
• A retracement mode has remained in play in recent weeks, and price action late yesterday saw the cross dip back below the 50-day EMA, threatening to end the recent underlying bullish theme. However, today’s price action sees spot rise back above both the 20- and 50-day averages – which will keep the daily close significant for the cross. MA studies are in a bull-mode set-up suggesting the pullback from the Mar 11 low is likely a correction.
• This morning’s low of 0.8333 and 0.8321, a Fibonacci retracement, provide key short-term support. Overall, levels between 0.8300-0.8200 continue to represent the base of a longer-term range. Initial resistance is at 0.8395, before the key bull trigger at 0.8450, the Mar 11 high.
• Yesterday we noted how several analysts had touted the risks to EURGBP remain tilted to further strength. Notably, ING see upside risks extending beyond the recent 0.845 highs this week, while SocGen state there’s a good case for being long EURGBP here and remain bearish GBP vs. the Scandies. Furthermore, BBVA believe sterling will weaken for the rest of the year, particularly against EUR.

OI data points to a mix of net long setting (TU, TY & WN) and short cover (FV, UXY & US) during yesterday’s rally, with the former outweighing the latter.

• The net long setting in TU & TY futures provided the only positioning swings of any real note.