ASIA FX: Equity Risk Off Drives USD Gains, USD/KRW Still Sub 1470, CNH/JPY Lower
Nov-18 05:38
North East Asia FX is weaker against the USD, weighed down by broader risk off and regional equity market losses. Weakness in the crypto space is spilling over into equity sentiment. Most notably the Kospi has fallen 3% so far today. Taiwan's Taiex is off around 2.5%. China markets are more resilient, but still down around 0.55% for the CSI 300.
- USD/CNH has continued to rise, putting some distance now with last week's lows near 7.0900. We were last close to 7.1150, near session highs and 20-day EMA resistance. CNH is outperforming higher beta plays, but has given up some ground versus the yen. The CNH/JPY cross got to fresh highs above 21.85 in the first part of trade, but now tracks under 21.80, as risk off benefits yen at the margin. The USD/CNY fix rose but remains close to recent lows.
- Spot USD/KRW is higher, but found selling resistance around the 1467.5 region. We were last back under 1465 level as risk appetite has stabilized somewhat (bitcoin back above 90k etc). Focus will be on whether we see increased supply in 1470/80 (or slightly higher) region, as the authorities look to improve supply/demand in the FX market. Earlier data showed a rise in household credit, firming the case for no change next week at BoK's policy announcement.
- Spot USD/TWD is up, maintaining the recent uptrend. We were last 31.22, against fresh highs back to early May of this year. Equity weakness is likely a factor in keeping this uptrend intact. The 1 month USD/TWD NDF has now fully retraced Friday's sell off, last at 31.15.
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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.
