The Weakening Ruble and the US Senate's "Big Beautiful Bill." Financial Market Review, July 2

On Wednesday, July 2, the ruble fell moderately against foreign currencies. The US Senate passed Trump's tax and spending bill by a margin of one vote

Currency

The Chinese yuan exchange rate slightly increased on the Moscow Exchange during the trading session on July 2. By 19:00 Moscow time, the yuan exchange rate was 10.95 rubles, which is 1 kopeck higher than the closing level of the previous trades.

The official exchange rate of the US dollar against the ruble, announced by the Bank of Russia on July 3, increased by 0.24 rubles and amounted to 78.65 rubles. The official exchange rate of the euro against the ruble, announced by the Bank of Russia on July 3, decreased by 0.07 rubles and amounted to 92.68 rubles.

The Central Bank of the Russian Federation calculates official rates based on data from financial statements of credit institutions based on the results of interbank conversion transactions on the over-the-counter foreign exchange market.

The Chairman of the Central Bank of the Russian Federation Elvira Nabiullina stated during the Financial Congress of the Bank of Russia that if the indicators show a faster economic slowdown and a decrease in inflation in the Russian Federation, this will give the Central Bank room to reduce the key rate more quickly. According to her, the exchange rate, although it may not meet the expectations of individual industries, should balance the interests of all players and reflect the balance of supply and demand from all participants.

Sberbank CEO German Gref said during the Central Bank of the Russian Federation congress that there are risks of the Russian economy overcooling, and it is very important not to overexpose high real rates. "We, of course, see obvious risks of the economy overcooling. Of course, I think that everyone understands this, the Central Bank understands this well. And now is the time to level the situation, it is very important not to overexpose high real rates," Gref said. Moreover, according to Gref, a reduction in the Central Bank of the Russian Federation's key rate by 100 or 200 basis points is insignificant for the economy, a more serious step is needed.

On the global currency market, the dollar index against a basket of six major currencies DXY remained virtually unchanged and was around 96.8 points by 20:30 Moscow time.

On Tuesday, the Senate approved a bill that would cut taxes and increase defense spending. Now the House of Representatives will take up the version of the bill approved by the Senate. Republican leaders in the lower chamber of the US Congress have already expressed their intention to approve the bill by July 4.

US President Donald Trump has suggested that the House of Representatives will follow the Senate in approving the "big beautiful bill" initiated by the White House to reduce taxes and increase spending in a number of areas. According to the market, the implementation of this bill will lead to an increase in the budget burden and the US national debt.

Traders are also focusing on the June U.S. unemployment report, due out on July 4. If the data shows signs of a weakening labor market, expectations for a Fed rate cut will increase.

Stock

The main trading session on the Moscow Exchange ended with a decline in the main indicators. The Moscow Exchange Index fell by 1.2% and closed at 2815 points. The RTS Index fell by 1.5% and ended the trading session at 1127 points.

The main indicators of the US stock market showed mixed dynamics in the first half of the trading session. By 20:30 Moscow time, the Dow Jones industrial index had fallen by 0.1%, the S&P 500 index had added about 0.3%, and the NASDAQ-100 had risen by 0.6%.

Oil

Oil prices rose on the evening of July 2. The price of Brent oil futures contracts on the London ICE Futures exchange was around $69 per barrel by 20:30 Moscow time. The price of WTI oil futures on the New York Mercantile Exchange by this time was around $67.5 per barrel.