AUSSIE BONDS: ACGB Jun-35 Auction Absorbed With More Demand Present

• CHINA PBOC CONDUCTS CNY135 BLN VIA 7-DAY REVERSE REPO MON

• he PBOC issued CNY135bn of 7-day reverse repo at 1.4% during this morning’s operations.
• Today’s maturities CNY43bn
• Net liquidity injected CNY92 bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.43%, from Friday’s close of 1.63%.
• The China overnight interbank repo rate is at 1.66%, from the prior close of 1.48%.
• The China 7-day interbank repo rate is at 1.65%, from the prior close of 1.60%.

The BBDXY range Friday night was 1227.14 - 1233.92, Asia is trading around 1229. The USD has opened under pressure in early Asian trading as risk has a knee-jerk reaction lower on the US downgrade.

• “Currency traders are bearish on the US dollar, with strategists at JPMorgan Chase & Co. and Deutsche Bank AG predicting it will continue to weaken.”(BBG)
• “The dollar index is still close to its April lows, and sentiment among options traders is the most negative in five years, with bets on a decline in the dollar over the next year at the highest level since 2020.”(BBG)
• There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows.
• The USD has attempted a bounce to challenge some of those positions on the back of the US-China tariff deal.
• The challenge did not last very long as the weight of supply has seen the BBDXY struggle to maintain any upward momentum.
• The BBDXY needs to hold above 1220 for this challenge to have another leg, a close back below here and the focus will return once more back to the lows.

• Data/Events : Atlanta Fed President Raphael Bostic , Dallas Fed President Lorie Logan and Fed Vice Chair Philip Jefferson speak at Amelia Island conference. New York Fed President John Williams speaks at an event organized by the Mortgage Bankers Association.

  Fig 1: BBDXY Daily Chart

  

  Source: MNI - Market News/Bloomberg