CNH: USD/CNH Stabilizes, Eyes On CNY Fixing Bias, Onshore USD/CNY Spot

The overnight range was 1.1469 - 1.1504, the Cross is dealing in Asia around 1.1475. The Cross topped out above the 1.1600 area and has since retraced showing the first signs of exhaustion. This 1.1600 area remains tough resistance but the price action has been unrelenting up until now. A sustained move back above 1.1600/50 and the market will start to get bulled up as the focus will turn toward the 1.2000 area and beyond. I have been a little wary of NZD positioning as the market got all beared up, the recent price action does suggest we are seeing first signs of the NZD underweight being pared back. It will take a little more than that though to discourage the bulls who have been in full control, and I suspect dips will remain well supported back toward 1.1350-1.1400 at first asking. 

• The AUD/NZD Average True Range(ATR) for the last 10 Trading days: 59 Points

Fig 1: AUD/NZD spot Dailly Chart

Source: MNI - Market News/Bloomberg Finance L.P

Headlines have crossed from Japan FinMin Katayama on FX rhetoric, although again at face value they don't appear to suggest intervention risks are imminent. USD/JPY is modestly off session highs, last around 155.20/25. Earlier we got to 155.38 (session lows rest at 155.18). 

• The FinMin did note they are deeply concerned/alarmed by FX moves, but remarks like, "“We can’t tolerate speculative moves.” “We will take appropriate action if needed.” "“We won’t rule out any options/means to combat excessive movements.”, still don't to be part of the rhetoric at this stage. Hence the market may continue to test the authorities resolve around FX.
• Some of the remarks by the FinMin are outlined below:
• "JAPAN FINMIN KATAYAMA: WON'T COMMENT ON FOREX LEVELS
• JAPAN FINMIN KATAYAMA: RECENTLY SEEING ONE-SIDED, RAPID MOVES
• JAPAN FINMIN KATAYAMA: ALARMED OVER FX MOVES
• JAPAN FINMIN KATAYAMA: WILL THOROUGHLY MONITOR FOR EXCESSIVE FLUCTUATIONS AND DISORDERLY MOVEMENTS IN FOREX MARKET, WITH HIGH SENSE OF URGENCY" RTRS"

US natural gas fell 5% to $4.340 on Monday on forecasts for milder weather at a time of ample inventory. It rallied 4.5% last week due to a cold snap in the eastern US. As winter approaches prices are likely to remain highly dependent on forecasts. European gas is also weather sensitive and continues to trade in a narrow range as it watches for indications on the winter outlook. Markets have largely looked through Ukrainian strikes on Russian energy facilities and Iran’s diversion of a tanker in the Gulf of Oman.

• Henry Hub rose to $4.541 before trending down to $4.323. It is now 7.4% below the 13 November high.
• Forecasts are for above average temperatures across most of the US, except the northeast, going into the fourth week of November. Demand growth remains strong rising 12.5% y/y on Monday with output up 6.8% y/y, according to BNEF data.
• European gas rose 0.8% to EUR 31.49 on Monday to be up 1.2% this month driven by reports of colder weather this week. It fell to EUR 31.170 before recovering. It has traded between EUR 30.285/32.575 through November.
• Storage levels are below 2024’s but steady inflows, LNG & pipeline from Norway, have helped to keep prices in a narrow range. Storage is very gradually trending lower – it is now around 81.9% after making 83% this month. It reached 95.3% in October 2024.