CNH: Can't Test Sub 7.0900, Cross Asset Trends Slightly Less Yuan Supportive
Nov-16 23:36
USD/CNH is down slightly in early Monday trade, last near 7.0980. Late last week we had a number of attempts to test under 7.0900 but couldn't, so this may be a near terms support point. Upside moves to around the 50-day EMA (near 7.1275) are still likely to draw selling interest given the underlying CNY fixing bias. Spot USD/CNY finished up at 7.0993 on Friday, while the CNY CFETS basket was little changed at 97.83 (off slightly last week, -0.14%).
- US-China headlines, around the rare earths deal not being finalized yet, along with a arms sale from the US to Taiwan (announced on Friday) likely helped push USD/CNH a little higher late last week. US Tsy Secretary on Sunday, in the US, said in relation to the rare earths deal, "We haven't even finished the agreement, which we hope to have done by Thanksgiving," which falls on November 27, Bessent said on Fox News's "Sunday Morning Futures" program. (via BBG)
- US-CH yield differentials also edged higher at the end of last week (the 2yr spread around +216bps), as doubts remain over a Fed cut in Dec. Global equity market sentiment remained skittish, with China equities also weaker (the Golden Dragon index fell 1.61% in Friday US trade, down for the fourth straight session).
- Today on the data front, we have Oct FX settlement data, which will be eyed to gauge FX conversion trends, which were stronger in Sep. Due in the next few days is also FDI figures.
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
