CNH: USD/CNH near 50-day EMA Support, CNH Rebounds On Key Crosses
USD/CNH tracks just under7.2900 in early Thursday dealings, after the yuan bucked the broader USD rebound from Wednesday. CNH rose 0.37% for Wednesday, while the DXY gained nearly 1% and the BBDXY was up close to 0.60%. This helped reverse some of the recent sharp CNH losses on key crosses like JPY and EUR. Spot USD/CNY finished up at 7.2871, while the CNY CFETS basket tracker rose 0.31% to 96.00 (per BBG).
- Yuan outperformance likely related to hopes of lower tariffs from the US side, after earlier Wednesday morning (Asia Pac time) comments from US President Trump. Overnight US Tsy Secretary Bessent stated that there had been no unilateral offer from Trump to cut China tariffs and that a full trade deal negotiation would take a number of years.
- Further Trump comments have come out this morning, stating a tariff level announcement on China was likely in the next 2-3 weeks. Trump stated that if a deal can't be reached then the US would decide on the tariff rate set for China.
- For USD/CNH technicals, current levels are right on the 50-day EMA support zone. The 100-day is further south near 7.2740. Highs from earlier this week rest at 7.3212.
- CNH/JPY rebounded back to 19.70 on Wednesday, but sits slightly lower now (last near 19.635). Recent lows in this cross rest at 19.137. EUR/CNH is back under 8.2600, against recent highs just under 8.4400.
- The local data calendar is empty today.
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CNH: USD/CNH Holding Above 7.2600, Yuan Sees Little Gain From Tariff Headlines
USD/CNH mostly stayed on the front foot through the course of Monday's session. We track near 7.2640/45 in early Tuesday dealings, after posting a modest 0.09% loss in CNH terms on Monday. Spot USD/CNY finished up at 7.2607. The CNY CFETS basket tracker edged a little again on Monday, +0.10% to 98.8805. The index continues to recover from lows amidst higher USD index levels.
- Monday's further modest CNH loss was still the fifth straight decline for the currency. USD/CNH is now back to the 50-day EMA resistance point, which near 7.2650 is close to current spot levels. We are above all other key EMAs. Early March highs in USD/CNH were above 7.3000. The 200-day is back near 7.2400.
- The USD/CNY fixing continues to show a modest upside bias (Monday's print at 7.1780), although there is still a gap with Jan 20's fixing of 7.1886. Nevertheless, this is still probably providing some encouragement to yuan bears.
- CNH didn't appear to see much relief from Trump's comments on more targeted tariffs. There doesn't to have been much progress in terms of lowering tensions between the US and China on trade issues.
- The firmer US yield backdrop/higher equities from Monday, post the Trump tariff headlines and with some data support (better services PMI print) likely helped keep USD/CNH dips supported.
- Locally today, the 1yr MLF is scheduled, but no change is expected from the current 2.00% rate. This rate is being de-emphasized though as a policy tool.
JGBS: US Tsys Weigh On Futures Overnight, BoJ Minutes For Jan MPM
In post-Tokyo trade, JGB futures closed weaker, -14 compared to settlement levels, following a heavy NY session for US tsys.
- Expectations that the April 2 reciprocal tariffs would be flexible, with breaks to countries and sectors as suggested Friday, and would not be as onerous as the more sweeping measures initially threatened underpinned US equities. Indeed, stocks took in their stride with other comments from President Trump about expecting auto tariffs.
- Beliefs that the worst may be over for stocks added to the buying momentum, as did the better-than-expected rise in the S&P Global Services PMI.
- Stocks surged, extending Friday's rally, with NASDAQ's 2.25% jump leading the way. The S&P 500 was 1.75% higher, with the Dow ~1.5% higher.
- The strong risk-on move weighed heavily on US tsys. Concession building ahead of the $183bn in auctions this week added to the selloff, as did the somewhat hawkish comments from the Fed's Bostic, though he is not a voter.
- US 2- and 10-year yields were up 9 bps to 4.03% and 4.33% respectively.
- Today, the local calendar will see the BoJ Minutes for January MPM and Department Sales data alongside an auction for Enhanced-Liquidity 5-15.5-years.
AUSSIE 10-YEAR TECHS: (H5) Reverses Off First Resistance
- 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: 95.515 @ 16:42 GMT Mar 24
- 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 last week’s 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.
