CNH: CNY Fixing - USD/CNY Edges Back Up Towards 7.0600 After Fixing

• CHINA SETS YUAN CENTRAL PARITY AT 7.0885 TUES VS 7.0867

In Tokyo morning trade, JGB futures are weaker, -16 compared to settlement levels, after resuming trading following the long weekend.

• MNI Tech: Prices started last week well, growing the gap with next support into the 135.61 Oct 08 low. Despite this stability, prices remain inside the firm downtrend that’s dominated prices since mid-September, and prices will need to challenge resistance before signaling any broader reversal. Key short-term resistance has been defined at 137.30, the Sep 8 high. Further weakness would open 135.39 next, a Fibonacci projection. (see chart)
• Cash US tsys are slightly richer in today’s Asia-Pac session after yesterday’s modest sell-off.
• Cash JGBs are flat to 1bp cheaper across benchmarks, with the 7-10-year zone underperforming. The benchmark 10-year yield is 1bp higher at 1.679% versus the cycle high of 1.705%.
• Swap rates are flat to 2bps higher, with a steepening bias. Swap spreads are mostly wider.
• Following last week’s policy decision, BoJ-dated OIS pricing is softer across late 2025/early 2026 meetings compared to early August levels, but slightly firmer for mid to late 2026 meetings.

Source: Bloomberg Finance LP

Following last week’s policy decision, BoJ-dated OIS pricing is softer across late 2025/early 2026 meetings compared to early August levels, but slightly firmer for mid to late 2026 meetings.

• As far as the October 30 meeting was concerned, markets had been positioned for a cautious, wait-and-see approach from the BoJ.
• Current OIS pricing implies just a 9% probability of a 25bp hike in December, rising to 47% by January and 85% by March.
• A full 25bps hike is not fully priced until June 2026.

Figure 1: BoJ-Dated OIS – Today Vs. August 1

Source: Bloomberg Finance LP / MNI