PRECIOUS METALS: Profit Taking, Holidays & Exchange Measures Moving Prices

USD/CNH is holding under 7.0700 in early Monday dealings. We remain close to late Nov lows (7.0653). Despite the positive USD/CNY fixing surprises, USD/CNH upticks continue to be sold. We haven't been able to spend much time above 7.0800 in recent sessions. Downside focus in USD/CNH will remain on a test towards 7.0500. On the upside, note the 20-day EMA is near 7.0980/85. Even a tick up in US-CH yield differentials through Friday (with the 2yr spread back up to +207bps, against recent lows near +201bps) couldn't lift the pair. Broader USD weakness mostly remains in play though, the BBDXY lost 0.70% last week. USD/JPY is under 156.00 ahead of a key BoJ Governor Ueda speech, which may be aiding CNH at the margins today. 

• Focus will remain on the USD/CNY fixing, with the fixing error positive through Thursday/Friday last week. Spot USD/CNY ended last week at 7.0745, while the CNY CFETS basket tracker was down to 97.92, losing 0.31% last week.
• The weekend's softer than expected official PMIs for Nov (manufacturing to 49.2 (49.4 forecast) and services to 49.5 from 50.0 forecast) has done little to impact sentiment so far.
• A little later on the Nov RatingDog PMI for manufacturing prints. The market forecasts a 50.5 outcome, versus 50.6 prior. 

Risk off mood gripping markets in latest dealings. Bitcoin and other crypto weaker, we can't see any obvious headline drivers. We were last down around 4% for Bitcoin. US equity futures seeing some spill over weakness, led by tech. Nasdaq futures off around 0.60%, while Eminis down a little over 0.40%.

• In FX space, this is aiding yen outperformance, particularly against AUD, but focus also likely on the Ueda speech later. USD/JPY around 155.70/75, while JGB yields firmer across the curve. UST yields have edged up.
• In commodities, oil and silver higher, while gold is down a touch.

The overnight range was 101.85 - 102.36, Asia is currently trading around 101.95. The pair looks to potentially be stalling back outward the 102.50 area. Risk has opened on the backfoot in early Asian trading, as Katayama says they are considering revising the corporate governance code and the market eagerly awaits the upcoming Ueda speech, hoping for clues regarding a December rate hike. What Ueda says in just over 30 minutes will dictate price action. A move below 101.50 on the day could indicate a short-term top and a potential pullback, though dips back toward the 100 area should be supported first up. A sustained break above 102.50 is needed for the market to then turn its focus toward 105 initially before it will begin looking at decade long highs around 108.00-110.00.

• The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 80 Points

Fig 1: AUD/JPY spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P