CNH: USD/CNY Fixing Another YTD Low, USD/CNH Testing Low 7.1200 Region
The USD/CNY fix printed at another YTD low of 7.0968. Market consensus was 7.1208. The error term was slightly tighter at -240pips, versus -325pips yesterday. USD/CNH is testing lower, sub 7.1240. Late Sep lows in USD/CNH were just under 7.1190. We also had a brief dip sub 7.1000 in mid September. The fixing is the strongest since Oct last year, which should keep USD/CNH downside risks in play.
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CNH: USD/CNY Fixing Lower But Still Above 7.1000
The USD/CNY fix printed at 7.1027, versus a BBG market consensus of 7.1163.
- Today's fix remains above recent lows (7.1008 recorded on Sep 8). The fixing error was slightly tighter at -136pips today, compared with -175pips yesterday.
- USD/CNH is a little higher post the fixing outcome. We were last close to 7.1200 (session lows so far rest at 7.1175).
CHINA SETS YUAN CENTRAL PARITY AT 7.1027 TUES VS 7.1056
- CHINA SETS YUAN CENTRAL PARITY AT 7.1027 TUES VS 7.1056
LNG: Higher Wind Power Generation Should Allow EU LNG Stock Building
European natural gas had been driven higher by geopolitical concerns from Ukraine’s attacks on Russian energy infrastructure, calls for more sanctions and Israel’s strike on Hamas in LNG exporter Qatar. However, on Monday prices fell 1.8% to EUR 32.07 due to an expected pickup in wind-generated power with Bloomberg predicting Germany will reach a new high. Less gas consumption allows it to be stored instead ahead of the upcoming heating season.
- Epex Spot reported German power prices at their lowest since 31 December 2024 (Bloomberg). But LSEG noted that when wind power fills the grid, producers have to pull back production and that could be done at a record rate this week.
- Further sanctions on Russia are being discussed by the EU and US but President Trump has said that NATO needs to stop importing Russian crude before he’ll impose further restrictions.
- US gas returned to above $3 as forecasts for warmer weather drove a 3.5% increase to $3.045 on Monday. It now stands up 1.6% in September.
- A pickup in cooling demand is expected despite the US now in the shoulder season between cooling and heating needs. Much of the US is now forecast to see higher temperatures in the second half of September, according to Vaisala.
