CHINA: CNY1.1tn 3 Month Reverse Repo Today
- The People's Bank of China (PBOC) announced yesterday that it will conduct 1.1 trillion yuan of outright reverse repurchase operations on January 8 through fixed-amount, interest rate bidding and multiple-price bidding, with a term of 3 months (90 days).
- As a CNY1.1 trillion 3-month outright reverse repos matures today, the outright reverse repo replaces the existing 3-month, avoiding any maturity clashes with the lunar new year holidays mid-February.
- Liquidity appears to be ample at present with consecutive withdrawals to start the new year.
- The PBOC has been flexible in maturities as the central bank to injected short- and medium-term liquidity fixed periods: around the 5th of each month, it conducts 3-month outright reverse repos; around the 15th of each month, it conducts 6-month outright reverse repos; and around the 25th of each month, it conducts medium-term lending facility (MLF) operations.
- The central bank is expected to conduct net injections of the 600 billion yuan of 6-month reverse repos maturing in January to supplement commercial banks' medium- and long-term liquidity.
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AUD: AUD/JPY - Holds Above 103.00, Can It Build Momentum
The overnight range was 103.05 - 103.37, Asia is currently trading around 103.30. The pair has started the week grinding above 103.00 as it looks to build on the break above 102.50. Risk stalled overnight in reaction to the move higher in US yields but for now the “risk barometer” AUD/JPY is not perturbed. On the day support looks to be around 102.70-90 where buyers should remerge looking for a move back above the overnight highs. If this support fails to hold it could signal a short-term pullback but buyers should then reemerge again back toward the 102.00 area. The market is looking to test the 105.00 area initially, above here and it will turn its focus toward the decade long highs around 108.00-110.00.
- The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 64 Points
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
STIR: 39bps Of Tightening Now Priced For Dec 2026 Ahead Of RBA Decision
RBA-dated OIS pricing is modestly firmer today for meetings beyond May 2026, ahead of the RBA’s policy decision.
- The RBA is unanimously expected to leave the Cash Rate at 3.6% when it announces its decision at 1430 AEDT (see MNI RBA Preview), followed by Governor Bullock’s press conference at 1530 AEDT.
- The market continues to price tightening across all meetings, with the implied probability of a 25bp hike rising from 3% today to 123% by August and 157% by December 2026.
- Given this pricing backdrop, there is scope for a modest relief softening if the Board signals that it needs more information before adjusting its rhetoric—particularly as the October CPI was the first release under the new monthly methodology.
- Key upcoming data include Q4 CPI on 28 January, November consumption figures, and the November and December labour-market reports.
- Following today’s moves, OIS pricing is now 10–45bps firmer across the curve beyond December 2025 relative to levels before the Monthly CPI release on 26 November, led by December 2026.
Figure 1: RBA-Dated OIS – Current Vs. Pre-CPI Monthly
Source: Bloomberg Finance LP / MNI
JAPAN: Nikkei(NHH6)-Bounces With Risk, Watch 50800-51000 Area To Cap Initially
The Nikkei(NHH6) contract overnight range was 50220 - 50705, Asia is currently trading 50750, +0.75%. The (NHH6) contract has opened much stronger this morning as risk takes a leg higher on news Trump is allowing Nvidia to sell H200 chips to China. Is this news enough to turn around a market that potentially looked to be retracing with worries about higher global bond yields.The Nikkei 225 technically remains in an uptrend while the support toward 48000 holds, albeit a very steep one. In the Asian session price will watch to see if this strong open is able to break above the 50800-51000 area, above here and the focus will turn toward the 51500-51700 resistance. Failure to push above here and we could see a pullback, first support is back toward the 49600-900 area.
- MNI POLICY: BOJ Unshaken By JGB Volatility. Bank of Japan officials see no need to intervene in the JGB market, even though they expect volatility to persist, and attribute the recent rise in yields to market assessments of the economic and inflation outlook as well as future policy moves, MNI understands.
- The Nikkei 225 Index Average True Range(ATR) for the last 10 Trading days: 691 Points
Fig 1: Nikkei 225 Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
