AUSSIE BONDS: Richer, US Tsys Buoyed By Risk-Off, Jobs Data Due

In post-Tokyo trade, JGB futures closed stronger, +8 compared to settlement levels, after US tsys finished the NY session showing a twist-flattening, with yields 3bps higher to 3bps lower, pivoting at the 7-year. 

• US tsy yields rose to their daily highs after Retail Sales data was released, with the market focusing more on the stronger control group sales, but the move wasn’t sustained and yields subsequently tracked lower.
• Headline advance retail sales were much weaker than expected in February at 0.2% M/M (0.6% expected, -1.2% prior rev from -0.9%), but this was offset by strong performances in core categories. But the control group sales rose 1.0% vs the 0.4% expected, more than offsetting the downward revision to Jan (-1.0% vs -0.8% prelim).
• Headline manufacturing index slipped -20 (cons -2) in March from +5.7. It’s the lowest since Jan 2024 having been at its strongest reading since a particularly strong 20.2 in Nov and before that Apr 2023.
• Today, the local calendar will see the Tertiary Industry Index and Tokyo Condominiums for Sale data alongside 1-year note supply. Nevertheless, the focus remains on tomorrow’s BoJ Policy Decision. It is widely expected that the policy rate will remain at 0.50%.

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.740/851 - High Mar 4 / High Dec 11 
• PRICE: 95.580 @ 16:42 GMT Mar 17
• SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.640 - 1.0% 10-dma envelope

Aussie 10-yr futures have faded sharply off the mid-week high, opening a small gap with first resistance. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.

USD/CNH tracks near 7.2290 in early Tuesday dealings, close to Monday intra-session lows near 7.2250. CNH gained 0.15% for Monday's session, slightly lagging broader USD index losses (the DXY lost 0.34%, the BBDXY down 0.26%). USD/CNH spot finished up at 7.2262. The CNY CFETS basket tracker, per BBG, was unchanged at 98.82. 

• For USD/CNH technicals, we are close to the 200-day MA (near 7.2215). A clean break south is likely to see round figure support at 7.2000 targeted. In terms of topside resistance, we have the 200-day EMA at 7.2390, while all the other key EMAs are above 7.2500.
• CNH/JPY has rebounded back above 20.60, with recent lows just under 20.20. EUR/CNH remains elevated though, last above 7.89 and close to recent highs (7.9151). AUD/CNH is above 4.6150, testing 100-day EMA resistance. CNH has generally lagged the softer USD tone and better risk appetite of late.
• In the equity space, to recap onshore markets finished down slightly in terms for the CSI 300, but the Shanghai Composite edged higher. In US trade, the Golden Dragon index was up 4% though.  
• Markets are digesting recent announcements around the PBoC mulling new tools to target key consumption sectors. Chinese authorities are also set to release plans for childcare subsidies, as well as increasing incomes of low-income rural populations, in a bid to boost consumption (see this link).
• US President Trump also stated China President Xi Jinping would visit the US soon (in remarks made Monday US time, see this BBG link).