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USD/CNH tracks near 7.2800 in early Wednesday dealings. Intra-session highs from Tuesday came in at 7.2840. CNH lost 0.21% for Tuesday's session. Spot USD/CNY finished up at 7.2702 Tuesday, while the CNY CFETS basket tracker edged a little higher to 99.05 (per BBG). 

• Upside focus in USD/CNH is likely to rest on a move above 7.3000, which marked early March highs. Downside support may be at the 200-day EMA (near 7.2400), while the simple 200-day is further south, close to 7.2400.
• USD/CNH looks too elevated relative to lower US-CH government bond yield differentials, with generally softer US survey data/inflation concerns not painting a great picture for the US economic backdrop.
• Still, as we noted yesterday, as the CNH weakened despite a firmer Caixin PMI print, near term focus will rest on the tariff announcement later Wednesday in the US afternoon. 1 week implied vols have ticked up but from low levels, the 1 month remains fairly benign around the 4.47% level.
• There is also a report due on China compliance with Phase One trade deal that the US-China negotiated during Trump's first term as President (see this link)
• In the equity space, yesterday's onshore markets managed modest gains, while in Tuesday US trade the Golden Dragon index nudged up 0.50%.  
• The local data calendar is empty today, with the Caixin services PMI and composite index out tomorrow. 

Today, the Australian Office of Financial Management (AOFM) will sell A$800mn of the 3.75% 21 May 2034 bond, issue #TB167. The line was last sold on 25 September 2024 for A$700bn.

• Several factors could influence bidding at today’s auction.
• The current yield is 25bps lower than at the previous auction and 30-35bps below the November 2024 high. The previous auction occurred when yields were at their highest level since the November 2023 cycle peak.
• However, the 3/10 yield curve is at its steepest since January 2022.
• The line's inclusion in the XM basket is also expected to support demand along with the resumption of positive sentiment toward longer-dated global bonds.
• While there is an expectation for continued firm pricing at auctions, some factors could constrain the overall strength of bidding.
• Results are due at 0100 BST / 1100AEST.

In post-Tokyo trade, JGB futures closed stronger, +5 compared to settlement levels after a decent NY session for US tsys ahead of Liberation (tariff) Day announcements. Accounts squared positions ahead of Wednesday afternoon's announcement from the White House (1600ET est).

• There was early FI support after lower than expected JOLTS job openings, quits and layoffs higher than expected. ISMs mixed with Mfg, new orders and employment lower than expected while prices paid jumped.
• A short while ago, a CNBC reporter posted on X, citing Republican Rep. Kevin Hern, that the tariff rates announced Wednesday will be the highest they will go and countries can then take steps to bring the tariffs down.
• The WSJ notes: "Trump's team in recent days has considered imposing a 20% universal tariff on virtually all imports, versus a reciprocal plan that would apply different tariffs to different countries. But the U.S. Trade Representative's office is preparing a third option-an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option, according to people with knowledge of the plans."
• Today, the local calendar will see Monetary Base data alongside BoJ Rinban Operations covering 1-3-year and 25-years+ JGBs.