FOREX: Yen Continues To Outperform, But EU Currencies Rebounding
Yen remains an outperformer in the G10 space. USD/JPY was last under 148.00, up around 1% in yen terms. Note the Mar 13 low was 147.42. We are already sub Mar 20 lows at 148.18, which was viewed as key short term support. The USD BBDXY index is down over 0.50% to 1264.
- Elsewhere the USD is away from best levels against the other G10 currencies. EUR/USD has rebounded back up to above 1.0900 (lows for the session rest at 1.0805). GBP/USD is near 1.3050. These currencies are now up for the session versus the USD. USD/CHF is down around 0.50% to 0.8775.
- USD/CAD is relatively unchanged, last at 1.4230.
- AUD/USD was last 0.6270/75 (session lows were at 0.6226), while NZD/USD was at 0.5730 (session lows at 0.5682). We are still lower for the session in terms of AUD and NZD.
- USD/CNH is back under 7.3300 (session highs so far rest at 7.3484).
- Cross asset sentiment remains risk poor, with US equity futures holding close to session lows. US Tsy futures are also at highs. Gold is at a fresh record high though, last near $3160.
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JGB TECHS: (H5) Sharp Bounce Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 142.73/144.48 - High Dec 9 / High Nov 11
- PRICE: 139.31 @ 16:21 GMT Mar 3
- SUP 1: 138.71 - Low Feb 19
- SUP 2: 138.62 - 2.0% Lower Bollinger Band
- SUP 3: 138.00 - 1.0% 10-dma envelope
JGBs extended the recent bounce Friday, firming further off recent lows as global equity markets underperformed. The show through 139.99 resistance shows the move could have legs - opening early December highs should the pace be maintained. 144.48 is the medium-term target for bulls.
CNH: Near 7.3000 As Markets Await China's Response To US Tariff Increase
USD/CNH sits around 7.3000 in early Tuesday dealings. Dips on Monday were supported sub 7.2850. CNH lost a modest 0.13% for the session on Monday, while USD/CNY finished up at 7.2876. US President Trump signed orders lifting the tariff rate on China imports to 20%. Broader USD indices were down sharply, as EU data outperformed, while US data disappointed. The CNY CFTES basket tracker rose 0.28% for Monday's session, back up to 100.175.
- For USD/CNH technicals, we remain within recent ranges. Upside focus is likely to rest on Feb 12 highs at 7.3247, beyond that lies 7.3365, a level that was touched on Feb 4. The 20 and 50-day EMAs rest close to each other in terms of downside support levels near 7.2830.
- Focus today will be on China's response to the US tariff announcement. The Global Times stated yesterday, US agricultural and food products could be targeted (see this BBG link).
- The USD/CNY fixing will be another focus point, although it has remained largely steady in recent weeks. We have also the National People's Congress starting soon, which could discuss fresh stimulus measures for the economy in light of the tariff threat.
- In US trade on Monday the Golden Dragon index lost nearly 3%, its third straight loss. US yields fell amid softer data and equity risk off, but CNH hasn't benefited from recent US yield losses given higher tariff levels.
- The local data calendar is empty until tomorrow's Caixin PMI prints for the services and composite indices.
JGBS: Futures Weaker Overnight But Labour Market Data Slightly Weaker
In post-Tokyo trade, JGB futures closed weaker, -3 compared to settlement levels.
- January’s Jobless Rate printed 2.5% versus 2.4% est. and prior. Job-To-Applicant Ratio printed at 1.26 versus 1.25 est. and prior. This may support JGBs in early dealings.
- Overnight, US tsys finished 4-6bps richer after a mixed manufacturing survey and falling oil prices sparked investor concerns about slowing growth. The move left US tsy yields at new multi-month lows on Monday.
- The decline in US yields accelerated after President Donald Trump's remarks that “no room left for a deal on Canada, Mexico” ahead of today’s deadline.
- Earlier, Trump posted on Truth Social: “To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external products on April 2nd. Have fun!”.
- Morning data showed a sharp rise in ISM Prices Paid, surging to 62.4 (consensus 56.0) from 54.9, with only seven responses compared to 59 for the headline index. This marks the highest level since June 2022 and continues an upward trend since November, when Trump won the presidential election.
- Today, the local calendar will also see Capital Spending, Company Profits, Monetary Base and Consumer Confidence data alongside 10-year supply.
