CHINA: Country Wrap: Tariffs on Goods from Africa Eliminated
- China’s robotaxi market is set to reach USD44.5 billion by 2035, with a compound annual growth rate of 96 percent over the next 10 years, according to a report released today by Chinese market research firm TrendForce. Baidu, Pony.ai, WeRide and many other Chinese autonomous driving companies are actively competing in this space, Taipei-based TrendForce said. Thanks to the rapid growth in the size of fleets and strong support from local electric car manufacturers and supply chains, the hardware cost of Robotaxis and their autonomous driving systems are coming down fast. This, in turn, will help reduce the price of a ride, encouraging more people to give Robotaxis a try. (source Yicai)
- China’s decision to eliminate import tariffs on goods from 53 African nations is set to give the continent’s coffee growers a stronger foothold in the Chinese market, according to industry insiders. China will remove tariffs on all products imported from the 53 African countries with which it has diplomatic relations, the General Administration of Customs said yesterday. (source Yicai)
- China and Hong Kong markets are mixed. The CSI 3000 is down modestly, but still above 4000 at this stage. Sell-side analysts are upgrading their full year China growth projection after yesterday's Q2 GDP beat. Still, concerns around retail spend and the property sector is likely tempering optimism. The Hong Kong's HSI is marginally higher, last under 24700, which marked earlier highs for the index and coincided with highs back in March. We may need to see a fresh positive catalyst from here to propel sentiment higher.
- Yuan Reference Rate at 7.1526 Per USD; Estimate 7.1901
- Bonds remain caught in tight ranges with the CGB10yr at 1.66%
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EURUSD TECHS: Uptrend Remains Intact
- RES 4: 1.1783 1.764 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1685 76.4% retracement of the Jan ‘21 - Sep ‘22 downleg
- RES 1: 1.1631 High Jun 12
- PRICE: 1.1547 @ 06:12 BST Jun 16
- SUP 1: 1.1404 20-day EMA
- SUP 2: 1.1267/1.1210 50-day EMA and a pivot level / Low May 29
- SUP 3: 1.1131 Low May 16
- SUP 4: 1.1065 Low May 12 and a reversal trigger
A bullish EURUSD theme remains intact and the pair continues to trade closer to its recent highs. Last Thursday’s rally resulted in a breach of key resistance at 1.1573, the Apr 21 high. This strengthens the bullish theme and confirms a resumption of this year's uptrend. Sights are on 1.1696 next, a Fibonacci projection. Initial firm support is at 1.1404, the 20-day EMA. The 50-day EMA lies at 1.1267. Short-term weakness is considered corrective.
JGBS: Cheaper, BoJ Decision Tomorrow, Ueda Presser & Taper Program In Focus
JGB futures are weaker, -52 compared to the settlement levels, and hovering near the session’s worst level.
- Cash US tsys are 2-3bps cheaper in today's Asia-Pac session. As we head into the June Fed meeting week, the next cut is only fully priced by the October FOMC meeting, with September seeing a roughly 80% implied probability.
- The BoJ is expected to keep its policy rate unchanged at 0.50% tomorrow. The key area of interest will be Governor Kazuo Ueda’s post-meeting press conference. Investors will closely examine his comments for any signals on the timing and likelihood of future rate hikes. If the BoJ begins to hint at stronger underlying inflationary trends or shows greater optimism about the economy, it could stoke expectations of a rate hike in the autumn.
- The second area of market focus is on the BoJ’s JGB purchase program. Market expectations suggest a slower pace of reductions during fiscal year 2026. If the BoJ chooses to maintain the current pace of ¥400 billion reductions per quarter in FY2026, this would be interpreted as a mildly hawkish move. (See MNI BoJ Preview here)
- Cash JGBs are flat to 4bps cheaper across benchmarks, with the 5-7-year zone leading.
- The swaps curve has twist-flattened, with rates 1bp higher to 1bp lower.
BUND TECHS: (U5) Corrective Pullback
- RES 4: 132.42 2.000 proj of the May 14 - 20 - 22 price swing
- RES 3: 132.00 Round number resistance
- RES 2: 131.85/95 High Apr 22 and the bull trigger / High Jun 13
- RES 1: 131.29 50.0% retracement of Friday’s range
- PRICE: 130.71 @ 05:44 BST Jun 16
- SUP 1: 130.65 20-day EMA
- SUP 2: 130.12 Low Jun 5 a key short-term support
- SUP 3: 129.30 Low May 22
- SUP 4: 128.97 Low May 14 and a reversal trigger
A bull cycle in Bund futures remains intact despite Friday’s pullback from its session high. An early rally Friday resulted in a print above key resistance at 131.85, the Apr 22 high and a bull trigger. A clear break of this hurdle would confirm a resumption of the uptrend that has been in place since Mar 11 and open 132.00 and above. Key short-term support has been defined at 130.12, the Jun 5 low.
