ASIA FX: USD/CNH Edges Up Ahead Of NPC Briefing, SEA FX Up In Spot Terms
USD/CNH has edged a little higher through the first part of Friday trade. We were last near 7.1580, close to 0.15% weaker in CNH terms. The CNY fixing was again close to neutral. Both China and Hong Kong equities have softened in the first half of the session, but are still up for the week. The market awaits details around further stimulus details at the conclusion of the NPC. A press conference is to be held in Hong Kong at 4pm to discuss the raising of the ceiling on local government debt to replace hidden debt.
- Intra-session lows from Thursday were at 7.1415, while post US election highs printed at 7.2132. There are the levels to be mindful of. Also note we get Oct inflation figures in China out tomorrow.
- Spot USD/KRW has been range bound. We were last near 1386, little changed for the session. Officials repeated remarks around financial market volatility and being prepared to act. BoK Governor Rhee stated that 1-2 weeks are needed to assess the US election impact for local policy (per BBG).
- Spot TWD is firmer by around 0.50%, as onshore markets play catch up with USD losses. USD/TWD was last near 32.05/10.
- In South East Asia, most currencies are higher, reflecting catch up gains as well. We are away from best levels though for some pairs. USD/THB was under 34.00 but now sits higher.
- USD/PHP is back above 58.40, while USD/IDR is around 15670, up 0.30% so far today.
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LOOK AHEAD: UK Timeline of Key Events (Times BST)
| Date | UK | Period | Event |
| 11-Oct | 0700 | Aug | GDP / Services / Production / Trade / Construction |
| 14-Oct | 0730 | --- | BoE Dhingra At Bank of India Conferece |
| 14-Oct | --- | --- | International Investment Summit |
| 15-Oct | 0700 | Aug / Sep | Labour Market Survey |
| 16-Oct | 0700 | Sep | Consumer / Producer Prices |
| 18-Oct | 0700 | Sep | Retail Sales |
| 22-Oct | 0700 | Sep | Public Sector Finances |
| 24-Oct | 0930 | Oct | S&P Global/ CIPS UK Flash PMI |
| 25-Oct | 0001 | Oct | Gfk Monthly Consumer Confidence |
| 29-Oct | 0001 | Oct | BRC Monthly Shop Price Index |
| 29-Oct | 0930 | Sep | BOE M4 / Lending to Individuals |
| 30-Oct | --- | --- | UK Budget |
| 01-Nov | 0930 | Oct | S&P Global/ CIPS UK Final Manufacturing PMI |
| 05-Nov | 0930 | Oct | S&P Global/ CIPS UK Final Services / Composite PMI |
| 06-Nov | 0930 | Oct | S&P Global/ CIPS UK Construction PMI |
US TSYS: Tsys Futures Off Earlier Highs, 10yr Holds Above 4% Ahead Of Auction
- Tsys futures are off earlier highs and now trade at session lows and back at NY closing levels, the moves look to have coincided with a bounce in equities following "CHINA MINISTRY OF FINANCE TO BRIEF ON FISCAL POLICY SATURDAY" - BBG. TU is trading +01⅛ at 103-14⅞, while TY is + 01+ at 112-16+.
- Volumes are roughly in line with recent averages, while earlier we did see a 2s10s steepener Blocked, DV01 $385k.
- Tsys curves have tbear-steepened, with yields +1.5bps to -0.5bps. The 2yr is -0.4bps at 3.955%, while the 10yr is +1.2bps at 4.024% and underperforms ahead of the 10yr auction later.
- The Fed's Jefferson spoke earlier, his comments were largely in line with recent Fed speaker. He explained the Fed's recent 50bp rate cut as a move to support the labor market while inflation continues to ease toward the 2% target. He noted that economic growth remains solid, inflation is now at 2.2%, and the labor market has cooled slightly, with unemployment rising to 4.1%. Jefferson emphasized a data-driven approach to future rate decisions.
- Traders are shifting their bets in the Tsys market, moving away from bullish positions as they expect a slower pace of Fed rate cuts following the strong September jobs report, long positions linked to the SOFR have sharply declined while new short positions are emerging ahead of key inflation data. The market is now pricing in 22bps of cuts at the November meeting, and 49bps by December, reflecting more cautious expectations for Fed policy easing.
- Focus will turn to trhe 10y Auction and Sep FOMC minutes due out later today.
SCHATZ TECHS: (Z4) Bear Threat Remains Present
- RES 4: 107.450 1.00 proj of the Sep 3 - 11 - 18 price swing
- RES 3: 107.225/335 High Oct 3 / 1 and key resistance
- RES 2: 107.110 High Oct 7
- RES 1: 106.970 20-day EMA
- PRICE: 107.790 @ 06:01 BST Oct 9
- SUP 1: 106.740 Low Sep 18
- SUP 2: 106.712 76.4% retracement of the Sep 3 - Oct 1 bull cycle
- SUP 3: 106.675 Low Sep 4
- SUP 4: 105.520 Low Sep 3 and a key support
A short-term bearish threat in Schatz futures remains intact following the reversal from the Oct 1 high. The contract has traded through the 20-day EMA and breached 106.815, the Sep 18 low. The break of this level signals scope for a deeper retracement to 106.712, a Fibonacci retracement. On the upside, initial resistance to watch is 106.970, the 20-day EMA. A clear break of it would signal a possible reversal.
