The EU and Russia in many economic aspects are antagonists, which ultimately leads to the mutual pressure of currencies on each other. But this is only part of the issue regarding politics and control over the distribution of energy resources.
From an economic point of view, the EUR/RUB pair is quite interesting and allows traders to withdraw a good spread. But for this, you need to understand how the economies of the European Union and the Russian Federation are arranged.
The euro is regulated by the European Central Bank and primarily depends on the decision on the credit rate. For this, the leadership of the financial institution meets eight times a year. Rising rates lead to a significant strengthening of the euro, falling – to a drawdown of the currency.
Market volatility begins to increase a week before the announcement of the results and remains high in the next 10-15 days. Traders need to start preparing at least two weeks before the ECB meeting.
The main drivers that influence the decision on the rate are GDP indicators, the general welfare of citizens, inflation, employment, and unemployment.
In a global sense, the strength of the euro is defined by Germany as the most developed and economically powerful EU country. France, Italy, Spain are making their contribution.
The remaining representatives of the eurozone either do not affect the situation, or, like the Eastern European countries and Greece, on the contrary pull the euro down. Based on this, it must be understood that the strength of the euro is based on an equation where the indicators of capitalistically developed countries are equal to the sign, and then Eastern European countries.
With a 100% euro balance, the interest rate remains unchanged, but any deviation will set the euro in motion and make the currency volatile enough, which is ultimately used to remove the margin.
You can track the financial condition of developed EU countries using indices that reflect the rise or fall of stock prices of major companies, as well as indices that reflect the level of citizens’ income.
If these parameters are reduced, less developed countries will also suffer losses, since most of their GDP is based on trade with economically successful neighbors.
The ruble is the national currency of the Russian Federation. The country is known for the fatty deposits of all the world’s existing minerals, including precious and heavy metals used for nuclear fuel.
However, RUB is purely a commodity currency. Starting from the 60-70s of the last century, the country’s leadership focused on the search and development of oil and gas fields. This activity actively continued to develop over 50 years.
As a result, this led to the fact that Russia became utterly dependent on the demand for oil and natural gas. Recent changes in geopolitics and a significant increase in the price of energy resources have forced the country’s authorities to think about abandoning raw materials binding.
But high-tech industries began to develop actively only in 2014. Therefore, there are no real prerequisites for the Russian Federation in the foreseeable future to remake the current economic model. And this means that the price of oil and gas will directly affect the ruble.
To make a forecast for RUB quotes, you need to follow OPEC meetings. They make the most critical decisions that affect the price of raw materials.
Also, any news related to the limitation of trade in oil or natural gas can lead to severe fluctuations of the ruble. An example is the capture of a tanker by Iranian security forces on July 2019, when in a couple of hours the ruble lost more than 1000 points.
Russia and China have a long-standing relationship, which, throughout history, has changed from friendly to extremely aggressive. In the 70-80 years, many military units were located on the border with China. There are also equipped with unique turrets from tank towers.
This demonstrates the dual nature of relations between the two countries. Nevertheless, China remains the leading trading partner of the Russian Federation.
The growth of the PRC economy determines that the country ceases to purchase finished products and focuses on the import of raw materials. For Russia, this results in a loss of 2-3% of GDP per year.
The extreme instability of the commodity market is caused by the fact that the ruble is in a state of permanent volatility. This is one of the best currencies for scalping.
It is quite dangerous to open medium and long-term positions on the EUR / RUB cross. Such a trading strategy should be avoided, especially for novice traders.