CHINA: SAFE Data Shows FX Settlement-Sales Spread at New High
Data on FX settlements from China's SAFE show the FX settlement ratio (a proxy for client willingness to settle FX) posting a sharp rise in September, to 71.2% from 61.2% in August. This is the highest level since August 2023 and is consistent with a sharp rise in exporters settling FX transactions in the month that covered USDCNY printing a new YTD low (Aug-Sept peak to trough was over 1.5%).
In contrast, the FX sales ratio (a proxy for client willingness to buy FX) was relatively stable at 63.3% (vs. August 67.7%), leading to a wider gap between settlement and sales in September. As a result, the FX settlement-sales spread has risen to a new 2025 high, and would be consistent with the weaker USD helping trigger the fastest pace of corporates closing out of FX positions relative to new FX exposure over the period.
Figure 1: FX Settlement/Sales Spread Highest of the Year
Source: MNI / SAFE / Bloomberg Finance L.P.
In addition, the SAFE data also shows an FX surplus totalling $51.1bln as a result of the rise of total FX purchases (up to $265bln from $212bln) outpacing the rise in FX sales (up to $214bln from $197bln).
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US TSYS: Inside Friday Range, Several Fed Speakers on Light Data Docket
- Treasuries drifting near the top end of a narrow overnight range - near the middle of Friday's range
- TYZ5 trades at 112-25.5 (+1.5) on thin cumulative volumes of 217k. 10Y yield +.0019 at 4.1293%.
- The pullback in Treasury futures from their recent highs appear corrective. Price has moved through the 20-day EMA, at 112-28+. The break signals scope for a deeper retracement and attention turns to the 50-day EMA, at 112-08+ and the next key support. Resistance well above at 113-29, Sep 11 high and the bull trigger.
- Data: Limited to Chicago Fed National Activity Index at 0830ET, Bbg survey estimate -0.16 est from -0.19 prior.
- Fedspeak: NY Fed Williams on monetary policy (0945ET), StL Fed Musalem on economy & policy from Brookings Inst (1000ET), Cleveland Fed Hammack on banks & economy (1200ET), Richmond Fed Barkin (1200ET), Fed Gov Miran moderated Q&A from Economic Club/NY (1200).
- Politics: Congress has departed for a week-long recess without a plan to fund the federal government (Senate blocked a CR bill Friday after the House passed the measure. Senate Majority Leader Thune (R-SD) is expected to delay a second CR vote until September 29, exerting as much pressure on Democrats as possible.
- At 1300ET, Press Briefing by the White House Press Secretary Karoline Leavitt.
- At 1600ET, President Trump expected to make an announcement on Significant Medical and Scientific Findings for America's Children.
OUTLOOK: Price Signal Summary - EURUSD Trend Set-Up Remains Bullish
- In FX, the trend theme in EURUSD remains bullish and S/T weakness is considered corrective. Gains in the first half of last week resulted in a climb above 1.1829 the Jul 01 high and bull trigger. Clearance of this hurdle confirms a resumption of the primary uptrend and opens 1.1923 next, the 2.00 projection of the Feb 28 - Mar 18 - 247 price swing. Support to watch is 1.1667. the 50-day EMA.
- A bullish theme in GBPUSD remains intact and the move down from last Wednesday’s high is considered corrective - for now. However, the pair has traded through the 50-day EMA and this signals scope for a deeper retracement. The next support to watch lies at 1.3441, a trendline support drawn from the Aug 1 low. For bulls, a resumption of gains would refocus attention on key short-term resistance at 1.3726, the Sep 17 high.
- USDJPY recovered sharply from last Wednesday’s low and the pair is holding onto its latest gains. A bullish candle pattern on Sep 17 - a hammer formation - provided an early reversal signal. Last Wednesday, the pair breached a number of important short-term support levels, however, this has not confirmed a bearish threat. A continuation higher would open 149.14, the Sep 3 high. Pivot support is 145.49, the Sep 17 low.
US 10YR FUTURE TECHS: (Z5) Corrective Pullback
- RES 4: 114-15 1.0% 10-dma envelope
- RES 3: 114-10 High Apr 7 (cont.)
- RES 2: 114-00 Round number resistance
- RES 1: 113-29 High Sep 11 and the bull trigger
- PRICE: 112-26+ @ 11:29 BST Sep 20
- SUP 1: 112-22/112-15+ Low Sep 19 / High Aug 5 and 14
- SUP 2: 112-08+ 50-day EMA
- SUP 3: 111-13+ Low Aug 18 and a key support
- SUP 4: 110-25 Low Aug 1
The pullback in Treasury futures from their recent highs appear corrective. Price has moved through the 20-day EMA, at 112-28+. The break signals scope for a deeper retracement and attention turns to the 50-day EMA, at 112-08+ and the next key support. Moving average studies remain in a bull mode position, highlighting a dominant uptrend. The bull trigger has been defined at 113-29, the Sep 11 high.
