TWD: USD/TWD Spot Uptrend Amid Equity Outflows, CBC Seen On Hold Later

• China’s 10YR bond future is lower in its largest drop year to date.
• Opening at 108.69 and after early attempts to rally, the 10YR future declined rapidly by -.40 to reach 108.375.
• The move sees the 10YR breach the 50-day EMA of 108.62, with the next key technical level the 100-day EMA of 107.83.
• China’s 2YR bond future is down by -0.11 at 102.36, breaching the 200-day EMA of 102.38 with the contract back to levels last seen in October last year.
• Optimism has showed signs of returning in China’s markets given apparent delays in the implementation of tariffs.
• China’s CSI 300 has had seven days of gains of the last 10 trading days as the news flow appears that this delay gives time for negotiations.
• Tomorrow sees New and Used Home price data released and will provide insight into whether the ongoing measures to return confidence to the sector are continuing. 

The Japanese Ministry of Finance (MOF) sells Y762.9bn 20-Year JGBs:

• Average Yield: 2.028% (prev. 1.983%)
• Average Price: 99.60 (prev. 100.24)
• High Yield: 2.067% (prev. 1.985%)
• Low price: 99.05 (prev. 100.20)
• % Allotted At High Yield: 9.1954% (prev. 60.5416%)
• Bid/Cover: 3.0557x (prev. 3.7891x)

The AUD/USD rate is higher as the market digests the RBA statement. AUD/USD is around 0.6360/65 in latest dealings, after being sub 0.6340 prior to the announcement. In the rates space, the OIS curve is flat to 3bps firmer now. For bond futures, ym and xm are -2. 

• The statement hints at caution around further cuts, which is driving the market reaction, more details to follow.