CNH: Near 7.1100 On broader USD Gains, But CNH/JPY Breaks Higher
Nov-17 22:28
USD/CNH probed above 7.1100 amid broader USD gains as Monday trade unfolded, but there was no follow through. We track near 7.1090 in early Tuesday dealings, after losing a little over 0.10% for Monday's session. Upside focus will rest with the 20-day EMA at 7.1165, then the 50-day near 7.1270. For now, the pair looks to have found a base ahead of the 7.0900 level as broader USD sentiment stabilizes. US Tsy yields were little changed on Monday, with some Fed speak in support of a Dec rate cut (notably Waller). US equity sentiment was softer.
- USD/CNH gains were more modest than broader USD index gains on Monday, with the BBDXY index up around 0.30%, the DXY +0.25%. Spot USD/CNY finished up at 7.1077, while the CFETS basket tracker was at 97.80, little changed for the session.
- CNH/JPY broke higher (as USD/JPY rallied through 155.00) to 21.8440 and we track just below this level currently. Upside focus will rest on a test above 22.00. Focus today will be on a meeting between BoJ Governor Ueda and new PM Takaichi, amid signs of tension between the government and BoJ around potential hike timing.
- With the USD/CNY fixing bias still pointing to yuan gains/resilience we would expect CNH to continue to outperform broader USD gains.
- Local equity market sentiment may remain under pressure amid broader global tech concerns. The Golden Dragon index lost a further 1.21% in US Trade on Monday.
- On the data front, we should get Oct FDI figures today. Yesterday, the FX settlement ratio for Oct eased back to 62.9% from 71.2% in Sep.
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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.
