What does the mixed US Employment Report mean for the markets?

The Russian ruble weakened on Friday – despite a jump in oil prices which would usually have supported the currency – following a US missile strike in Syria. (See our Emerging Europe Update, “First thoughts on what the US airstrike in Syria means for Russia”, 7th April.) Nonetheless, we suspect that oil prices, rather than politics, will ultimately decide the ruble’s fate. The changing nature of Russia’s exchange rate regime means we cannot directly compare recent events with past political flare-ups. While the ruble did not react much following the annexation of Crimea or the downing of Malaysian Airlines Flight 17 in 2014, this is because Russia’s central bank was still intervening heavily to manage the currency until later that year. However, since the central bank relinquished control of the ruble, oil prices have been by far the most important driver of movements in the currency – despite some major political developments.