CNH: USD/CNH Close To YTD Highs, May Inflation Figures Out Today
Tuesday highs in USD/CNH came just shy of 7.2750, which printed during US trade. In early Wednesday dealings we sit slightly lower, around 7.2720 (CNH recorded a modest 0.08% loss for Tuesday's session). USD/CNY spot finished up at 7.2544 yesterday, so just shy of the upper daily trading limit (7.2558, +2% above the daily fixing outcome).
- The general trajectory for USD/CNH remains skewed higher, albeit with a modest appreciation path. YTD highs are just above 7.2800, a potential upside focus point, ahead of key US data /event risks later. On the downside, the 20-day EMA is back near 7.2555, the 50-day around 7.2460.
- BBG notes that state owned banks were USD sellers yesterday as USD/CNY rose to 7.2530 in onshore trade (which was a fresh high for 2024). The modest upside drift in the USD/CNY fixing is allowing some yuan depreciations pressures.
- Today we have the May inflation prints on tap. The market expects 0.4% y/y for CPI (prior 0.3%), while the PPI is projected at -1.5% y/y (from -2.5% prior). Note we also wait for May new loans/aggregate finance data.
- Local equity sentiment was negative yesterday, the CSI 300 closing near the simple 200-day MA (off 0.87%). In US trade the Golden Dragon index fell 1.59%.
- Government bond yields see the 10yr wedged close to 2.30%, the 2yr around 1.74%, fresh lows back to 2020.
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NZD: AUD/NZD Tests 20-Day EMA Support
- AUD/NZD was little changed on Friday, the cross tested support at 1.0960 (20-day EMA) before finishing the session at 1.0970, early Monday we trade up 0.08% at 1.0975. The 14-day RSI holds steady above 50 at 55, while the MACD indictor is neutral. A break below the 20-day EMA at 1.0960 would be needed to see a directional changed with 1.0900 (round number support/50-day EMA) the next support zone, while initial resistance is 1.1031 (May 7 high),
- The AU-NZ 2Y swap is up 2bps at -65bps.
- Option expiries: 1.0950 ($200.46m), 1.1100 (153.15m) May 13 NY cut.
- Looking ahead: NZ Performance Services Index, Food Prices & 2Yr Inflation Expectation and AU NAB Business Surveys
NZD: NZD/USD Holds Above 0.6000, Food Prices & 2yr Inflation Expectation Up Next
The Kiwi pushed drifted lower on Friday finishing the session down 0.24% at 0.6020. There session was relatively quiet with little in the way of local data or headlines while there was mixed messaging in the U. of Mich. Sentiment falling to 67.4 vs 76.2 est, from 77.2 in Apr, while headline sentiment missed expectations and pointed to a deteriorating consumer, the one-year inflation expectation metric rose to 3.5% from 3.2%, the highest since late 2023.
- The NZD/USD finished the Friday session towards the bottom of the daily range and spent most of the day trading within about 20-pips. The pair traded sideways the past week with the 100-day EMA acting as resistance, the 14-day RSI hovers above 50, while the MACD has started to print decreasing green bars. Early morning on Monday we trade down 0.05% at 0.6017.
- Key levels to watch: Initial resistance of 0.6044 (May 5 highs/100-day EMA) would be needed to test the of 0.6068 (200-day EMA), to the downside a clear break of 0.6000/6007 (round number support/ 50-day EMA) would open a move to 0.5981 (20-day EMA) and below here 0.5917 (May 2 lows).
- The US-NZ 2y is up 5bps to -13.5bps
- Option expiries: 0.5690 (NZD760m) while notable upcoming strikes are 0.5885 (NZD950m May 16), 0.5695 (NZD760m May 14), 0.5915 (NZD731.4m May 15)
- Looking ahead: Performance Services Index, Food Prices & 2Yr Inflation Expectation Today
AUSSIE 3-YEAR TECHS: (M4) RBA Bump Higher
- RES 3: 96.540 - High Feb 2 and a Key resistance
- RES 2: 96.506 - High Mar 11
- RES 1: 96.240 - High Apr 19
- PRICE: 96.010 @ 16:14 BST May 10
- SUP 1: 95.730 - 76.4% retracement of the Jan - Feb rally
- SUP 2: 95.480 - Low Oct 31
- SUP 3: 95.330 - 2.618 proj of the Feb 2 - Feb 14 - Mar 11 price swing
Prices gained on the back of the RBA rate decision early last week, topping the 96.00 handle in the process. Nonetheless, the trend condition in Aussie 3yr futures remains bearish despite recent strength. The recent leg lower following the break of 96.060, the Apr 17 / 18 lows, suggests potential for a continuation near-term, towards 95.730, a Fibonacci retracement point. Key short-term resistance has been defined at 96.240, the Apr 19 high. A break of this level would reinstate a bullish theme and refocus attention on gains towards 96.540, the Feb 2 high (cont).
