CNH: USD/CNY Fixing Steady, Error Term Slightly Tighter

• CHINA SETS YUAN CENTRAL PARITY AT 7.1879 TUES VS 7.1876

The USD/CNY fix printed at 7.1879, versus a BBG consensus estimate of 7.3197.

• Today's fixing delivered a -1318pip error term, wider than yesterday's -1181pip outcome, but within recent extremes. The actual fixing was very close to yesterday's outcome (7.1876).
• The upper limit on daily spot today is around 7.3317. Yesterday's onshore spot closed at 7.3281.
• USD/CNH is holding sub 7.3500 in the first part of Tuesday dealing, outperforming a firmer USD trend, particularly against the yen. 

ACGBs (YM -2.0 & XM -1.0) are slightly weaker and near session cheaps despite today’s weak local data. 

• The number of building approvals in November was very weak falling 3.6% m/m after an upwardly revised 5.2% m/m. The weakness was across both private houses and non-house dwellings with them down 1.7% m/m and 10.8% m/m respectively. Through the volatility, total approvals continue to trend gradually higher.
• Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest bear-steepener.
• Cash ACGBs are flat with the AU-US 10-year yield differential at -16bps.
• Swap rates are flat.
• The bills strip is flat to -3 across contracts.
• RBA-dated OIS pricing is flat to 4bps firmer, with late 2025 leading. A 25bp rate cut is more than fully priced by April (107%), with a February cut at a 57% chance.
• November CPI is released tomorrow and is likely to be watched closely ahead of Q4 data on January 29. It will also include more updates for services components than the October release. Bloomberg consensus is forecasting the headline to pick up 0.1pp to 2.2%. The trimmed mean was 3.5% the previous month.
• The local calendar also shows retail sales and trade balances on Thursday.
• AOFM Bond issuance is expected to resume in the week beginning 13 January 2025.