MNI EUROPEAN OPEN: Yuan Fixing Higher Again

EXECUTIVE SUMMARY

• YUAN FIXING AT HIGHEST IN 19 MTHS DUE TO TRADE WAR - MNI
• CHINA WILL FIGHT ANY NEW US TARIFFS - MNI
• FED’S GOOLSBEE SAYS BUSINESSES WORRIED ABOUT INFLATION - BBG
• US/IRAN TO TALK ON SATURDAY ON NUCLEAR DEAL - BBC
• EU CONSIDERING 25% TARIFFS ON US IMPORTS OF CERTAIN ITEMS - POLITICO
• BI INTERVENES AS USDIDR JUMPS - BBG
• JAPAN PRIORITY IN TARIFF DISCUSSIONS - BBG

Fig 1:  USDIDR at new highs

Source: MNI - Market News/Bloomberg/Refinitiv. 

UK 

FISCAL (RTRS): “British Prime Minister Keir Starmer said on Monday that his government's first reaction to higher tariffs imposed by U.S. President Donald Trump should not be to relax public borrowing rules.”

FINANCE (BBG): “Banks have been in contact with the Bank of England’s Prudential Regulation Authority to discuss liquidity after Trump’s tariffs unleashed a market rout, the Financial Times reports.”

EU

TRADE (POLITICO): “The European Union will have to commit to buying $350 billion of American energy to get a reprieve from Donald Trump's sweeping tariffs, the U.S. president said late Monday, dismissing Brussels' offer of "zero-for-zero" tariffs on cars and industrial goods.”

TRADE (POLITICO): “The European Commission is considering slapping tariffs of up to 25 percent on a broad range of exports from the United States in response to tariffs imposed on steel and aluminium by U.S. President Donald Trump, according to an internal Commission document seen by POLITICO.”

EU (POLITICO): “The European Commission is finalizing a plan to make its artificial intelligence rules more palatable to companies, as they scramble to adapt to American tariffs that have sent shockwaves through the global economy.”

UKRAINE (BBC): “Ukrainian President Volodymyr Zelensky has publicly acknowledged for the first time that his troops are active in Russia's Belgorod region.”

GERMANY (POLITICO): “The incoming leader is facing slumping approval ratings and a barrage of criticism from parts of his conservative base who believe he is yielding to the will of the center-left Social Democratic Party (SPD) during coalition talks.”

CZECH (POLITICO): “Populist Czech election front-runner Andrej Babiš is a European security risk who’s promoting Russian propaganda, Prague’s Foreign Minister Jan Lipavský told POLITICO.”

US

FED (MNI): “The Federal Reserve is unlikely to soon step in an and save the U.S. economy with interest rate cuts as the Trump administration imposes sweeping tariffs that will raise prices, slow growth, and weigh on hiring, the former chair of the White House Council of Economic Advisers, Jared Bernstein, told MNI.”

FED (BBG): “Federal Reserve Bank of Chicago President Austan Goolsbee said there’s a lot of anxiety among business leaders that tariffs could spark widespread supply disruptions and renew inflationary pressures.”

TRADE (BBG): ““For countries that don’t retaliate, we are at a maximum tariff level, and it is my hope that through good negotiations all we will do is see levels come down,” Bessent said in an interview with Fox Business Monday. “But that’s going to depend on the other countries.””

TRADE (BBG): “President Donald Trump said he wasn’t considering a pause on his plan to implement sweeping additional tariffs on dozens of countries despite outreach from trading partners eager to avoid the levies, while still signaling he could be open to some negotiations.”

TRADE (BBC): “Donald Trump has threatened China with an extra 50% tariff on goods imported into the US if it does not withdraw its 34% counter-tariff, as global markets continue to fall.”

POLITICS (BBC): “The US Supreme Court is allowing President Donald Trump to continue to use a rarely-invoked wartime powers law to carry out rapid mass deportations of alleged gang members - for now.”

IRAN (BBC): “The US and Iran are holding "direct talks" over a possible nuclear deal on Saturday, Donald Trump has said. Discussions between Washington and Tehran will be at a "very high level", the US president said on Monday, before warning it would be a "very bad day for Iran" if no agreement was reached.”

DEFENCE (POLITICO): “President Donald Trump and Defense Secretary Pete Hegseth pledged a first ever $1 trillion defense budget proposal on Monday, a record sum for the military.”

OTHER 

JAPAN (BBG): “Japan looks set to get priority in US tariff talks, moving to the front of a long line of countries seeking to roll back President Donald Trump’s so-called reciprocal duties, which are scheduled to kick in on Wednesday.”

SOUTH KOREA (BBG): “Samsung Electronics Co.’s quarterly profit beat expectations after strong demand for its Galaxy S25 smartphones and legacy DRAM outpaced slipping margins in the high-stakes AI memory arena.”

SOUTH KOREA (BBG): “A top South Korean trade official said the government is reviewing multiple packages to present to the Trump administration as it seeks to reduce a trade surplus with the US in a bid to negotiate a lower tariff rate.”

SOUTH KOREA (AFP/BBG): “South Korea will hold a presidential election on June 3, the country's acting president said Tuesday.”

SOUTH KOREA (BBG): “South Korean officials will continue to closely monitor financial markets as volatility in the local financial, FX markets are likely to continue for some time, according to a government statement.”

AUSTRALIA (BBG): “Australia’s consumer confidence tumbled in April to a six-month low as President Donald Trump’s barrage of tariffs and the accompanying slump in stock markets hit households hard.”

NEW ZEALAND (MNI): “Christian Hawkesby has been appointed as Governor of the Reserve Bank of New Zealand for a six-month term by the Minister of Finance Nicola Willis, upon the recommendation of the RBNZ Board.”

NEW ZEALAND (BBG): “Finance Minister Nicola Willis said while New Zealand has been hit with a 10% tariff on its exports to the US, the main risk is that its other trading partners, some of whom face higher tariffs, are adversely affected.”

ASEAN (BBG): “Malaysian Prime Minister Anwar Ibrahim said his country and Association of Southeast Asian Nations partners will dispatch officials to Washington D.C. for talks following President Donald Trump’s rollout of global tariffs.”

INDONESIA (BBG): “Indonesia’s financial markets tumbled on reopening from a long holiday during which markets across the world cratered in response to rising tariffs.”

INDONESIA (BBG): “Bank Indonesia is intervening “aggressively” in both domestic and offshore markets to stem the rupiah’s slide on Tuesday.”

ISRAEL (POLITICO): “Israeli Prime Minister Benjamin Netanyahu announced Monday at the White House that Israel will erase its trade deficit with the United States, but it was not enough to immediately earn a reprieve from the sweeping tariffs President Donald Trump announced last week.”

CHINA 

TRADE (MNI): “China will resolutely take countermeasures to safeguard its own rights and interests should the U.S. further escalate tariffs, said spokesman of the Ministry of Commerce in a statement on the ministry website Tuesday.”

FX (MNI): “The People’s Bank of China set its U.S. dollar, yuan fixing at its highest level in 19 months as the currency suffered downward pressure amid an escalating trade war.”

FX (SECURITIES DAILY): “China’s foreign exchange reserves reached USD3.24 trillion at the end of March, up 0.42% from February, Securities Daily reported.”

PBOC (MNI): “People’s Bank of China will provide Central Huijin relending to ensure the stability of stock markets, according to a statement on the Bank’s website on Tuesday.”

FINANCE (MNI): “China’s state-backed Central Huijin Investment fund said on Tuesday it would scale up purchases of exchange-traded funds (ETFs) as equity markets suffer shocks from the China-U.S. trade war.”

FINANCE (MNI): “China has raised insurance funds' equity asset allocation corresponding to certain solvency ratios by 5%, the National Financial Supervisory and Administration Bureau said on Tuesday, aiming to raise support for the capital market and the real economy.”

FINANCE (ZHONGTAI): “China’s banks face additional loan demand and net interest margin pressure after the U.S. imposed reciprocal tariffs, said Dai Zhifeng, director at the Zhongtai Securities Research Institute.”

FINANCE (YICAI): “China’s A-share market could first decline before rising in late April, Yicai.com reported, citing analysts from China Merchants Securities.”

CHINA MARKETS 

MNI: PBOC Net Injects CNY102.5 Bln via OMO Tuesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY167.4 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY102.5 billion after offsetting the maturity of CNY64.9 billion today, according to Wind Information. 

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5608% at 09:33 am local time from the close of 1.7427% on Thursday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Monday, compared with the close of 45 on Thursday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Higher At 7.2038 Tues; -1.06% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.2038 on Tuesday, compared with 7.1980 set on Monday. The fixing was estimated at 7.3297 by Bloomberg survey today.

MARKET DATA

AUSTRALIA MARCH NAB BUSINESS CONFIDENCE -3; FEB. -2
AUSTRALIA MARCH NAB BUSINESS CONDITIONS +4; FEB. +3

AUSTRALIA APRIL WESTPAC CONSUMER CONFIDENCE 90.1; MAR. 95.9
AUSTRALIA APRIL WESTPAC CONSUMER CONFIDENCE -6% M/M; MAR. +4.0%

JAPAN FEB. CURRENT ACCOUNT SURPLUS Y4.061T; EST. +Y3.800T; JAN. –Y0.248T
JAPAN FEB. ADJUSTED CURRENT ACCOUNT SURPLUS Y2.317T; EST. +Y2.74T; JAN. +Y1.95T
JAPAN FEB. TRADE SURPLUS Y712.9B; EST. +Y535.9B; JAN. –Y2937B

JAPAN MARCH ADJ. ECO WATCHERS CURRENT INDEX 45.1; EST. 45.2; FEB. 45.6
JAPAN MARCH ADJ. ECO WATCHERS OUTLOOK INDEX 45.2; EST. 46.1; FEB. 46.6

SOUTH KOREA FEB. CURRENT ACCOUNT SURPLUS $7.178B; EST. +$2.94B
SOUTH KOREA FEB. GOODS TRADE SURPLUS $8.175B; EST. $2.50B

MARKETS

US TSYS: Cash Bonds Partially Reverse Yesterday’s Heavy Session

TYM5 is 112-04+, +0-03 from closing levels in today's Asia-Pac session.

• Cash US tsys are showing a bull-steepener, with benchmark yields 2-5bps lower, in today's Asia-Pac session after yesterday's extremely heavy session.
• “Even 'safe haven' trades like Treasurys are falling on Trump's tariffs. What does that tell investors?” (DJ see BBG link)
• “The recent US bond market selloff may appear linked to an increase in risk appetite, however simultaneous high yield US credit spread widening suggests otherwise, according to Citigroup. Investors may instead opt for alternative G-10 sovereign debt, such as that from Europe and Australia.” (per BBG)
• Economic data remains light ahead of key releases later this week. Markets are looking ahead to Wednesday's release of the March FOMC minutes, followed by CPI data on Thursday and PPI on Friday.

JGBS: Bear-Steepener Extends After Poor 30Y Auction

JGB futures remain sharply weaker, -104 compared to settlement levels, although off session lows.

• “Japan selected its economic revitalization minister Ryosei Akazawa to lead tariff negotiations with the US as it scrambles to seek a reprieve from the Trump administration, according to Chief Cabinet Secretary Yoshimasa Hayashi.” (per BBG)
• Cash US tsys are showing a bull-steepener, with benchmark yields 1-5bps lower. US economic data remains light today. Markets are looking ahead to Wednesday's release of March FOMC minutes, followed by CPI data on Thursday and PPI on Friday.
• Cash JGBs are 5-19bps cheaper, with a steeper curve, after today’s lacklustre 30-year auction.
• The 30-year bond auction delivered disappointing results. The low price came in at 99.00, falling short of dealer expectations at 100.00 (Bloomberg poll). The cover ratio declined to 2.9582x from 3.4997x, while the auction tail widened significantly to 0.75 — the largest since 2023 — up from just 0.12 previously, all pointing to noticeably weaker demand.
• Swap rates are flat to 4bps higher, with swap spreads tighter.
• Tomorrow, the local calendar will see Consumer Confidence and Machine Tool Orders data alongside BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs.
• BoJ Governor Ueda will also give a speech at the Trust Companies Conference.

AUSSIE BONDS: Cheaper But At Bests, RBA Gov Speech Tomorrow

ACGBs (YM -4.0 & XM -11.5) are cheaper but at session highs after a paring of yesterday’s losses by US tsys in today’s Asia-Pac session. Cash US tsys are showing a bull-steepener, with benchmark yields 2-5bps lower. 

• US economic data remains light today. Markets are looking ahead to Wednesday's release of the March FOMC minutes, followed by CPI data on Thursday and PPI on Friday.
• Domestically, Westpac's measure of consumer confidence sank 6% m/m in April to 90.1 down from 95.9 in March, which had been boosted by February's rate cut.
• Meanwhile, NAB's March business survey was little changed from February with confidence down 1 point to -3 and conditions up 1 point to +4.
• Cash ACGBs are 4-11bps cheaper with the AU-US 10-year yield differential at +8bps.
• Swap rates are 3-8bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing -3 to -6.
• RBA-dated OIS pricing is 4-8bps firmer across meetings today. A 50bp rate cut in May is given a 46% probability, with a cumulative 114bps of easing priced by year-end.
• Tomorrow, the local calendar will see Consumer Inflation Expectation data and a speech by RBA Governor Bullock.
• The AOFM plans to sell A$1000mn of the 2.75% 21 November 2028 bond tomorrow.

BONDS: NZGBS: Closed Cheaper But Mid-Range Ahead Of RBNZ Decision Tomorrow

NZGBs closed showing a dramatic bear-steepener, with benchmark yields 6-17bps higher. Nevertheless, yields closed well off session highs, particularly at the short end, This move aligned with richening in today's Asia-Pac session. NZGBs 16-20bps cheapening earlier in the session.  

• On a relative basis, NZGBs underperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials 3bps and 7bps wider.
• Swap rates closed finished 4-11bps higher, with the 2s01 s curve steeper.
• Tomorrow, the local calendar will see the RBNZ Policy Decision, with consensus unanimous in expecting a 25bp cut to 3.50%.
• RBNZ dated OIS pricing closed 1-5bps firmer across meetings, with Feb-26 leading. 27bps of easing is priced for tomorrow, with a cumulative 98bps by November 2025.
• Christian Hawkesby will be the head of RBNZ for an initial six-month period while a permanent governor is sought. The Reserve Bank board has started the recruitment process to find a permanent governor who will serve for five years, with Hawkesby and Assistant Governor Karen Silk considered likely candidates. (per BBG)
• On Thursday, the NZ Treasury plans to sell NZ$275mn of the 0.25% May-28 bond and NZ$225mn of the 4.25% May-34 bond.

FOREX: Consolidation Sees The USD Give Back Some Gains

China is signaling it is not backing down and prepared for a prolonged standoff. The communist Party’s official newspaper has declared Beijing is no longer “clinging to illusions” of striking a deal. Asian equities have found some support though in sympathy with the bounce in the US and a statement that the “PBOC to provide Re-Lending support for Huijin when needed”. In other words, the Chinese will smooth the stock market and not allow it to collapse.

• EUR/USD - 1.0905 - 1.0980, approaching the London session near the Asian highs around 1.0980 as risk continues to bounce.
• GBP/USD - 1.2721 - 1.2792, trading at the day's highs going into the London session.
• AUD/USD - 0.5978 - 0.6062, a good bounce off its lows as price rejects the first foray below 0.6000. Look for the 0.6150/0.6250 area to find good resistance.
• AUD/JPY - 88.25 - 89.44, pressing this highs going into the London session, an ugly rejection on the Daily chart means there might be some more reversion back to the mean, but when risk takes another leg lower expect sellers to return. The 91.50/93.00 area is good resistance.
• USD/CNH - 7.3366 - 7.3651, trading near the day's lows going into the London session. The PBOC fixing was above the closely watched 7.2000 for the time since 2023. The market is taking this as a sign of them being open to let the peg go, and continues to see a higher USD/CNH as the cleanest way to play the tariffs. Asia though could once again not get above the key 7.36/37 area. A break above 7.38/40 would be significant for USD/CNH and broader the USD backstory.
• USD/JPY -  147.25 - 148.12. USD/JPY has seen a significant bounce and is now approaching a key sell zone between 148 - 150.
• Cross asset : SP +1.1%, Gold 3000.00, US 10yr 4.1450%, BBDXY 1266, Brent 65.11
• Key US data this week will be the US CPI April 10th.

USDCNH

Source: MNI - Market News/Bloomberg

ASIA STOCKS: Taiwan Bounces Back as Korea’s Outflows Intensify. 

A large inflow into Taiwan after their break as global Investors continue to withdraw from Korea with another day of significant outflow from Malaysia. 

• South Korea: Recorded outflows of -$1,552m as of yesterday, bringing the 5-day total to -$4,773m. 2025 to date flows are -$10,082, m. The 5-day average is -$955m, the 20-day average is -$287m and the 100-day average of -$147m.
• Taiwan: Had inflows of +$1,291m as of yesterday, with total outflows of -$552m over the past 5 days. YTD flows are negative at -$16,956. The 5-day average is -$110m, the 20-day average of -$402m and the 100-day average of -$236m.
• India: Had outflows of -$367m as of 4th, with total outflows of -$630m over the past 5 days.  YTD flows are negative -$14,373m.  The 5-day average is -$126m, the 20-day average of +$17m and the 100-day average of -$145m.
• Indonesia: Had inflows of $38m as of the 27/3, with total inflows of +$54m over the prior five days.  YTD flows are negative -$1,830m.  The 5-day average is +$11m, the 20-day average -$33m and the 100-day average -$34m
• Thailand: Recorded outflows of -$185m the 4th, totaling -$202m over the past 5 days. YTD flows are negative at -$1,331m. The 5-day average is -$40m, the 20-day average of -$34m the 100-day average of -$19m.
• Malaysia: Recorded outflows of -$237m as of yesterday, totaling -$419m over the past 5 days. YTD flows are negative at -$2,575m. The 5-day average is -$84m, the 20-day average of -$64m the 100-day average of -$39m.
• Philippines: Saw outflows of -$56m as of yesterday, with net outflows of -$71m over the past 5 days. YTD flows are negative at -$285m. The 5-day average is -$14m, the 20-day average of -$2m the 100-day average of -$6m.

OIL: Crude Higher But Trade Deals Needed To Prevent Further Sell Off

Oil prices are higher today as risk-sensitive assets rally following sharp falls since the US announced higher-than-expected tariffs. WTI trended up through today’s APAC session and is +1.4% to $61.55/bbl after a high of $61.75. Brent is 1.4% stronger at $65.09, close to the intraday high and off the low of $64.45. The softer USD is also likely providing some support to dollar-denominated oil (USD index -0.4%).

• Today has seen a relief rally but concerns over the impact of a trade war on global oil demand are never far away. Markets appear to have paused due to a mix of selling fatigue and watching & waiting to see the results of imminent negotiations between the US and numerous regions, including EU, ASEAN and Japan. A lack of compromise though would likely send oil prices lower again.
• The US has threatened China with a further 50% tariff if it retaliates. China said today that it prefers to negotiate but will “fight to the end”. China is the world’s largest importer of crude and is likely to switch any flows from the US to other suppliers.
• While lower fuel prices may help US consumers, they are unlikely to encourage further drilling with the Dallas Fed estimating that average WTI needs to be $65 to make new wells profitable (Bloomberg).
• The EIA’s short-term energy monthly outlook will now be published on April 10, a delay from April 8. It said that it is “re-running” models to include the latest developments, according to Bloomberg.
• Today US industry-based inventory data is released. Also the Fed’s Daly, BoE’s Lombardelli and ECB’s Cipollone & de Guindos speak. US March NFIB small business optimism and Canada’s March Ivey PMI print.

GOLD: Gold Up in Asian Trading as Equities Stabilise

•  In US trading overnight, gold fell for the third day straight yet as equity markets in the region showed some positive signs, gold improved also.
• Opening at US$2,983.28, gold added small gains today to reach $3,004.22.
• *Despite reassurances from Trump officials to investors that the tariff plan won't derail the economy, there remains little appetite for risk in most asset classes.
• Despite the reassurances, Trump then threated with upping the tariffs on China.
• *With the arbitrage in pricing between the US and UK over, the flow of physical gold into London resumed in March with an increase for the first time in five months.
• Yesterday, in China's FX Reserves release, the Central Bank provided details on the growth of gold held by the PBOC, as it rose for a fifth consecutive month.

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
08/04/2025	0645/0845	*	FR	Foreign Trade
08/04/2025	0900/1000	**	GB	Gilt Outright Auction Result
08/04/2025	0900/1100		EU	ECB's De Guindos At Spanish Banking Association Meeting
08/04/2025	1000/0600	**	US	NFIB Small Business Optimism Index
08/04/2025	1255/0855	**	US	Redbook Retail Sales Index
08/04/2025	1400/1000	*	CA	Ivey PMI
08/04/2025	1400/1600		EU	ECB's Cipollone at ECON Hearing On Digital Euro
08/04/2025	1400/1000		US	United States Trade Representative Jamieson Greer
08/04/2025	1600/1700		GB	BoE's Lombardelli on 'What can the UK learn from the US'
08/04/2025	1700/1300	***	US	US Note 03 Year Treasury Auction Result
08/04/2025	1800/1400		US	San Francisco Fed's Mary Daly
09/04/2025	-		NZ	Reserve Bank of New Zealand Meeting
09/04/2025	0200/1400	***	NZ	RBNZ official cash rate decision
09/04/2025	0900/1000	**	GB	Gilt Outright Auction Result
09/04/2025	1100/0700	**	US	MBA Weekly Applications Index
09/04/2025	-		US	Higher Reciprocal Tariffs On Imports
09/04/2025	1230/1430		EU	ECB's Cipollone On Macro-Financial Stability Panel
09/04/2025	1400/1000	**	US	Wholesale Trade
09/04/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks