CHINA: Bond Futures Mixed, Lower for the Week

Softer USD sentiment from earlier has stabilized. The USD BBDXY index was last back above 1210.3, up from earlier lows near 1209. USD/CNH is up from fresh lows, while JPY and AUD have pared earlier gains. The AUD/NZD cross is still higher, holding above 1.1400 post the Q3 Australian CPI beat. 

• USD/CNH has recovered some ground, with the market arguably looking for a lower USD/CNY fix (relative to mkt forecasts) to aid fresh downside. The pair was last back near 7.1000, with onshore spot also steady around 7.1000, another limit on CNH gains.
• US President Trump has spoken as travels to South Korea for the APEC summit (and meeting with China President Xi). He expressed confidence on the upcoming meeting with Xi and around lowering the tariff rate that China faces in relation to fentanyl. Market reaction has been limited though as the WSJ reported on such risks overnight. It stated tariff rates may come down to 10% from 20% (in relation to fentanyl), which would lower the average tariff rate China faces to around 45% from 55%.
• Elsewhere, AUD/USD is back under 0.6600 after spiking higher to 0.6607 post the stronger Q3 CPI print (which has seen RBA easing expectations move back close to flat). We were last 0.6590/95, but the A$ is outperforming versus NZD, the AUD/NZD cross back to 1.1415/20. NZD/USD was last under 0.5775
• USD/JPY got lows of 151.54, (which was still above the 20-day EMA) but last tracks around 151.95/00. US Tsy Bessent's earlier remarks aided the yen, as he stated the Japan government should give the BoJ the policy space it needs to keep inflation anchored and excessive FX volatility curbed. 

The People’s Bank of China will focus on deepening the reform of the modern central banking system and further improving the efficiency of monetary policy transmission in the next five years, Shanghai Securities News reported citing analysts following the release of the Proposal of the Party's Central Committee on the formulation of the 15th Five-Year Plan. Meanwhile, the Bank’s intension to build a "comprehensive macro-prudential management system" should focus on key areas such as systemically important financial institutions and cross-border capital flows, by improving risk monitoring and early warning and smoothening market fluctuations through counter-cyclical adjustments, the newspaper said.  

The yuan is expected to remain relatively strong against the U.S. dollar in the near term, but any appreciation may be limited given the dollar's resilience as the currency has already fallen sharply in the first half of the year and the market has partly priced in potential Fed rate cuts, Securities Daily reported citing Wang Qing, analyst with Golden Credit Rating. China’s economic fundamentals continue to play a major role in supporting the yuan, while the pent-up demand for foreign exchange settlement from customers may be released as the currency appreciates, said Ming Ming, chief economist of CITIC Securities, noting the central bank has sufficient policy reserves to stabilise the exchange rate.