RBNZ: MPC Consensus Decision To Hike 25bp

The USD/CNY fix edged a little higher to 6.8198 for Monday, versus the 6.8157 outcome from Friday. The fixing error was notably tighter at +219pips, versus +403pips on Friday. This fits with the strong USD index levels in the aftermath of the NFP beat on Friday and spike in oil futures today, as fresh Israel-Iran strikes impact sentiment. USD/CNH is around 6.7880/85 currently, still slightly down for the session so far. This is close to the 20-day EMA resistance point. Note the 50-day rest at 6.8170. Friday highs in the pair were around 6.7920, while earlier lows were just under 6.7650.  

European gas has started the week sharply higher following escalation of the Middle East conflict. The developments could derail sensitive US-Iran talks to reopen the Strait of Hormuz which is needed to allow Qatari gas to be shipped. Dutch TTF is up 3.7% to EUR 50.265 the first break above EUR 50 since mid-May. It trended higher over last week on growing concerns of a delayed deal. 

• President Trump apparently has requested Israel not to retaliate. He also told the FT that PM Netanyahu will have to accept a US-Iran deal when it is agreed. However, explosions have just been reported in Iran with the IDF stating it hit military targets there.
• Iran's action seems a response to Israel striking Beirut on the weekend as Hezbollah continuing to attack Israel following an Israel-Lebanon agreement last week. Despite this apparent unravelling of the prospects for free shipping through Hormuz, Trump told the FT that he thinks the US-Iran deal is “still on”.
• Dutch TTF finished last week up 6.1% w/w to EUR 48.82. Storage is only 42.1% full, around 10pp below the same time last year.
• With production from the third largest LNG exporter shut in, the market remains vulnerable to any disruptions. Strikes began 2 June and are interrupting output at Australia’s Ichthys LNG facility with action likely to intensify on 11 June after unions walked out of Fair Work Commission negotiations on Saturday.
• US gas is lower again today at around $3.18 after falling 3.5% to $3.22 on Friday driven by lower LNG demand mainly due to scheduled maintenance which is adding to ample domestic inventories. Bloomberg estimated flows for export fell 6.9% w/w. US lower-48 output rose 1.8% y/y on Friday while demand fell 2% y/y, but temperatures are expected to be above average to mid-June across much of the US.

• CHINA PBOC CONDUCTS CNY218.5 BLN VIA 7-DAY REVERSE REPO MON