CNH: USD/CNY Fixing Rises To 7.1889, Fixing Error Remain Wide

ACGBs (YM +7.0 & XM +7.0) are sharply stronger and at Sydney session highs after the release of the February RBA Meeting Minutes.

• "If the evolving data signalled that inflation was proving more persistent than expected, it would be reasonable to maintain a more restrictive stance of policy by holding the cash rate at 4.1 per cent for an extended period – given members’ assessment that this level would still be restrictive – or by even tightening policy if the outlook was for inflation to rise materially. On balance, members judged that accepting the risk of needing to adopt such a course of action was preferable to accepting the risk of holding interest rates high for too long.” (per RBA)
• Retail sales rose 0.3% m/m (estimate +0.3%) in January versus -0.1% in December.
• The current account deficit narrowed to A$12.547bn (estimate -A$12.0bn) in Q4 from a revised -A$13.885bn in Q3. Net exports from GDP was +0.2 ppts.
• Cash US tsys are 1-4bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s solid gains.
• Cash ACGBs are 7bps richer with the AU-US 10-year yield differential at +13bps.
• Swap rates are 6-7bps lower.
• The bills strip has bull-flattened, with pricing +1 to +9.

• CHINA SETS YUAN CENTRAL PARITY AT 7.1739 TUES VS 7.1745

A former RBNZ economist shares his OCR outlook.  
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