CNH: USD/CNY Fix Edges Down

The USD/CNY fix printed at 7.1733, versus a BBG market consensus of 7.2290.

• The fixing is above yesterday's outcome of 7.1688, despite USD weakness for Monday. The market estimate was higher than Monday's though.
• The fixing error was close to unchanged at -557pips.
• This fixing outcome keeps within recent ranges. USD/CNH has risen back above 7.2300 post the fixing outcome, with seemingly little sponsorship from the fixing to higher yuan levels. 

• CHINA SETS YUAN CENTRAL PARITY AT 7.1733 TUES VS 7.1688

In Tokyo morning trade, JGB futures are slightly stronger, +5 compared to settlement levels.

• 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. The BoJ is expected to keep its policy rate at 0.50% in March, with no urgency for another hike after its January increase. Strong Shunto wage negotiations saw a 5.5% rise, but broader wage pass-through is needed for sustained inflation above 2%.
• Analysts expect a gradual rate hike to 0.75% by July or September and 1.0% by early 2026, depending on SME wage trends.  Market pricing reflects uncertainty, with only half of a 25bps hike factored in for June and a full hike not priced until December. (see MNI BoJ Preview here)
• Cash US tsys are little changed in today’s Asia-Pac session. The focus is on Wednesday’s FOMC decision.
• Cash JGBs are 1-2bps richer across benchmarks. The benchmark 10-year yield is 0.7bps lower at 1.506% versus the cycle high of 1.58%.
• Swap rates are flat to 1bps higher out to the 30-year and -4bps beyond. Swap spreads are wider out to the 30-year.