MNI US OPEN - CNH Slippage Puts Rate in Range of Record Lows

EXECUTIVE SUMMARY:

• TREASURY DEPT HACKED IN 'MAJOR' BREACH
• CNH SLIPS TO MULTI-YEAR LOWS FOR YEAR-END
• CHINA TWEAKS CFETS RMB BASKET, EXTENDS TO COVER 25 CURRENCIES
• EARLY FINISH FOR UK, US MARKETS - EUROPE MARKETS CLOSED

Figure 1: USD/CNH rally puts price in range of alltime highs

NEWS

US/CHINA (NYT): China Hacked Treasury Dept. in ‘Major’ Breach, U.S. Says
The episode comes at a particularly sensitive moment, just as the Biden White House is dealing with one of the most far-reaching, and damaging, hacks into American infrastructure in the cyberage. One of China’s intelligence agencies hacked the U.S. Treasury Department, gaining access to the workstations of government employees and unclassified documents, the Biden administration said on Monday, the latest in a series of embarrassing surveillance operations against major American institutions.

CHINA: CFETS RMB Basket Tweak Drops USD, EUR, JPY Weighting, Adds MOP

China adjust the currency weightings as part of the CFETS RMB Index: Full basket of currencies now composed of 25 currencies, having included the Macau Pataca (MOP) for 2025:

• USD weighting dropped to 18.903% from 19.460%
• EUR weighting dropped to 17.902% from 18.080%
• JPY weighting dropped to 8.584% from 8.963%

Full list found here: https://iftp.chinamoney.com.cn/chinese/zxpl/20241231/3028340.html

CHINA (BBG): Xi Says China’s 2024 GDP Growth Set to Hit Target of Around 5%
China’s gross domestic product is expected to expand around 5% for the full year of 2024, President Xi Jinping said, signaling the world’s second-largest economy is on track to meet its official target. China’s economy was “overall stable and progressing amid stability,” Xi said at a new year event on Tuesday, according to a speech published by the official Xinhua News Agency.

CHINA (BBG): China Raises Salaries for Government Workers to Boost Spending
China has awarded a range of civil servants across the nation their first significant pay rise in years, according to people familiar with the matter, as policymakers try to boost morale and spur spending. The basic salaries of many government employees have been bolstered by at least 500 yuan ($68.51) per month, according to people who asked not to be identified discussing sensitive matters. That wage hike has been backdated to July, they said.

SOUTH KOREA (NYT): South Korea Clears Way to Detain President in Martial Law Inquiry
The police are investigating whether President Yoon Suk Yeol tried to lead an insurrection when he declared martial law and plunged the country into crisis. A court in South Korea cleared the way for officials to detain President Yoon Suk Yeol for questioning on Tuesday, as the authorities investigated whether his declaration of martial law this month, which plunged the country into political crisis, amounted to an insurrection.

TAIWAN (BBG): Taiwan Extends Tax Cut for Day Trading on Last Day Before Expiry
Taiwan lawmakers agreed to extend a tax cut for day trading for another three years on the last session before the measure was set to expire. Legislators in Taipei voted to renew the reduction of the transaction tax to 0.15% from 0.3%, ensuring the measure first introduced in 2017 will now stay in place until the end of 2027. The tax cut has been credited with helping to boost turnover in the island’s $2.5 trillion stock market, the world’s 10th biggest by value.

FOREX: USD/CNH High Puts Price in Range of Record Levels

• Price action Tuesday has been muted, with market closures across Europe keeping volumes low, and participation thin.
• USD/CNH has drawn interest - The offshore CNH slipped further: USD/CNH had already accelerated upside on the break of the mid-December high, which also coincided with the local onshore close. USD/CNH now well clear of 7.3500 and, importantly, has now topped 7.3682, the Sep 2023 high. This makes 7.3749 the next upside target, above which would mark a record high.
• China's December PMI data came and went with little fanfare: the composite PMI picked up to 52.2 from 50.8 previously thanks to the outperforming non-manufacturing sector.
• Datapoints are few and far between - with just the house price index for October and Dallas Fed Services Activity set to cross. 

BONDS: A wide trading range for Gilt

• A wide 40 ticks trading range for the Gilt contract, lower liquidity has helped exacerbate some of two way move, initially sold off on the Open, but has recovered towards its intraday high ahead of the Early close during the early Morning session.
• UK markets will be closing at 12.15GMT ahead of the New Year, and the timing for the closing Window in Gilt should be at 12:13-12:15 (GMT).
• Technically, the first resistance is seen further out, up 93.09, but market moves will likely stay limited with most Desks on the sidelines.
• US Treasuries and Tnotes have stayed within the Overnight ranges, just a 6 ticks range for TYH5 so far today.
• Immediate resistance for the US 10yr Bond futures is still at 109.08+, only managed a 109.06 high today.

EQUITIES: Bear Threat in E-mini S&P Remains Present

A bear threat in the S&P E-Minis contract remains present and the latest move down highlights the end of the recent Dec 20 - 26 corrective bounce. An extension lower would expose 5866.00, the Dec 20 low and a key short-term support. A bull cycle in the Eurostoxx 50 futures contract remains intact, however, the recent move down highlights a corrective phase. Despite the latest bounce, a short-term bear threat remains present - for now.

• In China the SHANGHAI closed lower by 55.563 pts or -1.63% at 3351.763 and the HANG SENG ended 18.53 pts higher or +0.09% at 20059.95.
• Dow Jones mini up 56 pts or +0.13% at 42977, S&P 500 mini up 17.75 pts or +0.3% at 5976.25, NASDAQ mini up 87.75 pts or +0.41% at 21503.25.

COMMODITIES: WTI Futures Holding Higher

WTI futures are trading higher today as the contract extends recent gains. A stronger reversal to the upside would refocus attention on key short-term resistance at $76.41, the Oct 8 high. Initial firm resistance is unchanged at $71.97. A bear threat in Gold remains present. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low.

• WTI Crude up $0.4 or +0.56% at $71.41
• Natural Gas down $0.14 or -3.51% at $3.799
• Gold spot up $8.09 or +0.31% at $2614.49
• Copper down $3.3 or -0.81% at $405.95
• Silver up $0.01 or +0.05% at $28.961
• Platinum up $8.16 or +0.9% at $912.55

Date	GMT/Local	Impact	Country	Event
31/12/2024	1355/0855	**	US	Redbook Retail Sales Index
31/12/2024	1400/0900	**	US	S&P Case-Shiller Home Price Index
31/12/2024	1400/0900	**	US	FHFA Home Price Index
31/12/2024	1400/0900	**	US	FHFA Home Price Index
31/12/2024	1500/1000	***	US	Conference Board Consumer Confidence
31/12/2024	1530/1030	**	US	Dallas Fed Services Survey
02/01/2025	2200/0900	**	AU	S&P Global Manufacturing PMI (f)