AUSSIE 3-YEAR TECHS: (H6) Near-Term Weakness Extends

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12  
• PRICE: 95.645 @ 16:05 GMT Feb 04
• SUP 1: 95.560 - Low Jan 27
• SUP 2: 95.480 - Low 1st Nov ‘23
• SUP 3: 94.932 - 1.0% 10-dma envelope

Prices were pressured to new lows on the back of the December and Q4 CPI print, quickly printing 95.560 before a swift recovery. This puts prices net higher and may signal a near-term bottom for the curve, even as markets continue to price in some rate hike optionality in the coming months. For now, prices remain well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support. 

NZGBs are 2-3bps richer after US tsys finished slightly yesterday slightly mixed. NZ-US 10-year yield differential 3bp lower, continuing its recent narrowing (see chart).

• Risk-off to risk-on (less off): equities weaker after Axios story making the rounds that plans for US/Iran talks on Friday are collapsing w/subject of nuclear weapons, missile program a non-starter.
• The geopol risk narrative cooled late: US Iran talks "back on" according to Barak Ravid posts on X - crude retreated from earlier highs, WTO appr 64.50 vs. 65.53 high. Stocks reacting positively (Nasdaq still underperforming with chip and software services stocks underperforming).
• Economic data to resume with stop-gap funding bill through September signed by Pres Trump late Tuesday, JOLTS expected Thursday at 1000ET, NFP on Feb 11, CPI pushed to Feb 13. Both the BOE and ECB decisions are expected too.
• NZ home value index fell 0.1% m/m in January versus -0.2% in December.
• Swaps have twist-flattened, with rates +/- 1bp.
• RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for February, while December 2026 assigns 44bps.
• The NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.

Bloomberg Finance LP

USD/CNH pushed back above 6.9400 late in Wednesday Asia Pac trade and spent most of the offshore session above this level. We track near 6.9410 in early Thursday dealings, with CNH losing close to 0.10% versus the USD for Wednesday trade. This outperformed higher USD index levels, where the BBDXY rose +0.30%. JPY and NZD weakness were a feature. USD/CNH is above intra-session lows from Wednesday (6.9290), but broader downtrend risks still persist from a technical standpoint. All key EMAs are trending lower, with the 20-day around 6.9585, which has been a recent cap on upticks in the pair. 

• USD/CNY spot finished up at 6.9439 on Wednesday, while the CNY basket edged a little higher to 97.91. Note mid Jan highs were around 98.80 for the index. CNH/JPY continued to recover, now back above 22.60 (continuing to close the gap with late Jan highs above 22.87). JPY is being pressure by the proximity of the Japan election, where PM Takaichi's LDP party is favoured in the opinion polls.
• BBG noted less FX exporter conversion interest yesterday: "Companies’ demand to convert FX into the yuan was lighter than previous days, and the demand for the dollar increased in the onshore market, according to traders." This along with the USD/CNY fixing bias, particularly given the higher USD index levels, will be watched today.
• Nomura maintains a bullish CNH outlook, targeting 6.70 by mid-April - via BBG: " citing strong yuan fixings, corporate settlement demand and US pressure for yuan appreciation."
• US President Trump and China President Xi had a phone call overnight, where a wide variety of issues were discussed. This comes ahead of Trump's planned visit to China in April of this year.