CNH: USD/CNH Back Sub 7.3000, Trump States China Final Tariff To Be Lower
USD/CNH tracks under 7.3000 in early Wednesday dealings, up around 0.25% in CNH terms versus end Tuesday levels in NY. Headlines crossed from US President Trump earlier that the final tariff on China wouldn't be at 145%. Broader USD sentiment is firmer, with yen off 0.80% against the USD, but so far CNH is outperforming these trends.
- Spot USD/CNY finished up at 7.3074 on Tuesday, while the CNY CFETS basket tracker ended at 95.70, down a further 0.28%. If current early Wednesday trends persist, with CNH outperforming this broader USD rebound, should see higher basket levels though.
- For USD/CNH technicals, not much has changed. Downside focus is likely to rest with the 50-day EMA, near 7.2885. We haven't been able to sustain breaches of this level in recent weeks. Beyond that lies the 100-day EMA near 7.2740. Highs from last week in the pair rest close to 7.3350.
- Trump's remarks that the final tariff on China wouldn't be at 145% followed earlier remarks from US Tsy Secretary on Tuesday, who privately told investors the tariff standoff is unsustainable and he expects de-escalation with China.
- The tariff outlook is likely to remain key for CNH sentiment. Earlier on Tuesday the IMF stated its 2025 growth projections for China were cut to 4%. This didn't take into account the full recent tariff escalation though.
- The local data calendar is empty today.
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JGB TECHS: (H5) Within Range of Fresh Cycle Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.73/144.48 - High Dec 9 / High Nov 11
- PRICE: 138.12 @ 16:12 GMT Mar 21
- SUP 1: 136.67 - 1.0% 10-dma envelope
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have traded lower breaching recent key support at 138.71, the Feb 21 low. This confirms a resumption of the bear leg and note too that MA studies are in a bear-mode set-up, highlighting a downtrend. Sights are on 136.57, a Fibonacci projection. For bulls, a show through 140.33 resistance would signal a possible reversal, and open early December highs should the pace be maintained. 144.48 is the medium-term target on any recovery.
AUSSIE BONDS: Jun-54 Supply Faces A Similar Yield But A Steeper Curve
Bidding at today’s A$300mn of the 4.75% 21 June 2054 Treasury Bond is likely to be shaped by several key factors:
- The outright yield is around the same level as the previous auction level but around 15bps lower than the January high.
- The 3/10 yield curve has steepened around 5bps since the last auction and hovers near its steepest level since mid-2022.
- Demand for duration should be supported by the improvement in sentiment toward longer-dated global bonds, which has strengthened since mid-January despite some deterioration over recent weeks.
- Results are due at 0000 GMT / 1100 AEST.
AUSSIE BONDS: AUCTION PREVIEW: ACGB Jun-54 Supply Due
The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 28 January 2025 for A$300mn. The sale drew an average yield of 4.9405%, at a high yield of 4.945% and was covered 3.6500x. There were 58 bidders, 22 of which were successful and 15 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 23.5%.
- This week's ACGB supply is larger than the recent average weekly issuance of $1500mn, with A$800mn of the 3.50% 21 December 2034 bond to be issued on Wednesday and A$700mn of the 1.25% 21 May 2032 bond due on Friday.
- According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance was revised to approximately A$95 billion, with A$46.4 billion completed at that time. This included around A$2 billion in Green Treasury Bond tenders, of which A$600 million had been issued at that time, and A$3 billion in Treasury Indexed Bonds, with A$1.7 billion completed at that time.
- Results are due at 0000 GMT / 1100 AEST.
