CHINA: Central Bank Injects CNY56.4bn via OMO
Money market rates are back to near term lows now following last week's liquidity injections with the CFETS Pledged Repo Deposit Institutions 7 Day Weighted nearing 1-Yr lows this morning and the China Overnight stable.
- The PBOC issued CNY256.4bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY300bn.
- Net liquidity injects CNY56.4bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.40%, from prior close of 1.47%.
- The China overnight interbank repo rate is at 1.30%, from the prior close of 1.30%.
- The China 7-day interbank repo rate is at 1.40%, from the prior close of 1.50%.
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MNI: CHINA PBOC CONDUCTS CNY475.3 BLN VIA 7-DAY REVERSE REPO TUES
- CHINA PBOC CONDUCTS CNY475.3 BLN VIA 7-DAY REVERSE REPO TUES
CNH: USD/CNY Lower But Fixing Error Tighter, USD/CNH Steady
The USD/CNY fix maintained its steady downtrend, falling to 7.0856 from 7.0881 yesterday. The fixing error was tighter though at -175pips, versus -288pips, which is the average for the previous 5 trading sessions. USD/CNH is holding lower for the session, but hasn't seen meaningful further downside in the aftermath of the fix. Lows in the 7.1025/30 region are holding for now (we were last 7.1065/70). Again the market may have been looking for greater downside in the USD/CNY fixing to drive fresh CNH gains.
LNG: European Storage Below Last Year, Region Vulnerable To Cold Winter
European gas fell 2.2% to EUR 31.30 on Monday, close to the intraday low, but is still up 3.2% this month. Yesterday’s decline was due to milder weather and increased wind-power generation which take the pressure off gas inventories. Storage has stabilised around 83% well below the 95% around a year ago and while flows into the EU have been steady, lower stock levels make the region vulnerable to disruptions and a cold winter.
- Germany’s gas storage is below the EU average at 75%, which is better than expected, according to Bloomberg. The Minister for Economic Affairs & Energy Reiche didn’t seem concerned saying that she didn’t think German supplies would be “jeopardised” this winter and so prices shouldn’t rise.
- A cold European winter and increased demand from Ukraine due to Russian attacks on its energy infrastructure remain key risks in the months ahead.
- The upcoming expiry on 29 October appears to be driving volatility in the November US natural gas contract. Prices rose 2.8% on Monday to $3.396, off the intraday high of $3.1469, while on Tuesday they are down 1.7% to $3.384. They are around 2% higher in October supported by forecasts for cooler weather going into November.
