FOREX: Yen Weakness Continues, Steady Trends Elsewhere
Feb-12 01:37
G10 focus remains centred on yen weakness. USD/JPY has risen back above 153.40 (session highs 153.46). This has been enough to push USD indices higher, the USD BBDXY last near 1301.7. There has been little aggregate shifts elsewhere in the G10 space.
- USD/JPY opened near 152.50, so is nearly 100pips higher versus these levels. We noted earlier the higher core backdrop from Tuesday was a yen headwind, although US yields sit down slightly for Wednesday trade so far.
- Hong Kong equity sentiment has opened up firmer, but trends are mixed elsewhere, while US futures aren't too far away from flat.
- BoJ Governor Ueda is before parliament at the moment, but hasn't delivered any market moving headlines so far.
- Yen weakness is driving crosses higher. AUD/JPY is back above 96.50, close to early Feb highs. EUR/JPY is closing in on 159.00
- For USD/JPY technicals, we are back close to the 100-day EMA, but the 50-day (around 154.70) is seen as more important resistance.
- AUD/USD was last near 0.6295, little changed, while NZD/USD has ticked up towards 0.5660.
- We had housing finance figures for Australia earlier, which continued to rise, but hasn't impacted FX sentiment.
- Later on we get preliminary Japan machine tool orders, but greater focus will rest with tonight's US CPI print.
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CNH: USD/CNY Fixing Steady, PBoC Vows Stable Yuan/Tweaks Capital Rule
Jan-13 01:25
The USD/CNY fixing printed at 7.1885, versus 7.3450 as per the Bloomberg market consensus.
- This puts the error term for the fixing at -1565pips, fresh wides since April 2024.
- USD/CNH is lower, last near 7.3550, around 0.10% stronger in CNH terms.
- headlines have filtered out from a FX meeting held in Beijing. The PBoC stating that the yuan will stay at a reasonable, balanced level. (per BBG). The central bank also raised the cross border macro adjustment parameter from 1.50 to 1.75, effective today.
- This is designed to boost offshore borrowing by local companies.
AUSSIE BONDS: Heavy & At Session Cheaps After Today’s Local Data Dump
Jan-13 01:23
ACGBs (YM -15.0 & XM -8.0) have extended morning weakness to be sharply cheaper and at the Sydney session's worst levels.
- The Melbourne Institute Inflation Index rose 0.6% m/m in December versus +0.2% in November. The index rose 2.6% y/y versus +2.9% in November.
- ANZ-Indeed job advertisements rose 0.3% from a month earlier (-12.5% y/y) in December.
- There have been no cash dealings in US tsys in today’s Asia-Pac session with Japan out for a holiday. TYH5 is, however, slightly weaker at 107-11, -0-01+ from NY closing levels.
- Cash ACGBs are 8-14bps cheaper, led by the short end.
- Swap rates are 7-12bps higher, with the 3s10s curve flatter.
- The bills strip has bear-steepened, with pricing -3 to -13.
- RBA-dated OIS pricing is 2-14bps firmer across meetings today. A 25bp rate cut is still more than fully priced for April (105%), with the probability of a February cut at 69% (based on an effective cash rate of 4.34%).
- AOFM Bond issuance will resume this week, with A$800mn of the 3.50% 21 December 2034 bond to be sold on Wednesday and A$700mn of the 2.75% 21 November 2027 bond to be sold on Friday.
US TSY OPTIONS: Option Flow: SFR Fly Sold
Jan-13 01:08
- BSFRM6M8 (SFR June26/June27/June28) Fly sold at .03 x6000. Post time 11:26.53 AEST
