CHINA PRESS: China Special Bond Issuance Up 44% Y/Y

US stocks traded heavily on Friday night likely aided by month-end rebalancing as funds sold Equities and bought bonds. The JPY consolidated some of last weeks gains in the crosses on Friday night as it looks to build on these moves.

• EUR/JPY - Friday night range 162.81 - 163.84, Asia is trading around 163.20. EUR/JPY continues to be capped on any move back towards 165.00. Looks like a 161 - 165 range for now.
• GBP/JPY - Friday night range 193.41 - 194.66, Asia trades around 193.65. Last week saw the move higher capped above 196.00 again. A sustained break sub 191.50 is needed to turn the focus back to the lows, until then it looks to be 192.00 - 196.00.
• NZD/JPY - Friday night range 85.45 - 86.17, Asia is currently dealing 86.15. The pair is trading sideways in a 84.00 - 87.50 range for now. No clear direction but there is an inclination for the market to want to express a long JPY.

• CNH/JPY - Friday night range 19.9114 - 20.0438, Asia is currently trading around 19.9100. CNY/JPY doesn’t seem to like it back above 20.00, can it begin to build for a move lower again, a move back below 19.7000 would turn the focus back towards 19.00.

  Fig 1 : GBP/JPY Daily Chart

  

  Source: MNI - Market News/Bloomberg

• The PBOC sold CNY400bn of 3-month outright reverse repo in May.  
• The PBOC sold CNY300bn of 6-month outright reverse repo in May.
• There will be CNY900bn of outright reverse repo maturities in May.  

The BBDXY range overnight was 1215.06 - 1218.30, Asia is currently trading around 1214. Asia opens under early pressure as trade friction between the US and China increases.

• (Politico) - “President Donald Trump said on Friday that he is doubling his tariff on steel to 50 percent, from 25 percent currently, to prevent billions of dollars worth of foreign steel from continuing to enter the United States.”
• U.S.-China Trade Truce Risks Falling Apart Over Rare-Earth Exports (WSJ): “A trade truce between the U.S. and China is at risk of falling apart, as China’s slow-walking on rare-earth exports fuels U.S. recriminations that China is reneging on the deal.”
• Bloomberg - “Scott Bessent said he’s confident the latest trade clash between Trump and Xi Jinping “will be ironed out” in a call “very soon.” He also told CBS’s Face the Nation the US “is never going to default” on its debt, while declining to say when the Treasury will run out of cash.”
• 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 market is still clearly focused on the “sell America” trade. What last week’s price action highlighted is the short-term market is all the same way so the frequency of sharp pullbacks will increase.
• The BBDXY rejected the 1125 area pretty strongly, the USD should continue to be met with supply should this 1225/30 area cap price. Focus will now turn back to the pivotal long-term support around the 1200 area.

• Data/Events : Monday's highlights include the ISM Manufacturing survey and an appearance by Fed Chair Powell, with the June employment report looming at the end of next week.

  Fig 1: BBDXY Weekly Chart

  

  Source: MNI - Market News/Bloomberg