CNH: USD/CNY Fixing Error Tightens Modestly
The USD/CNY fixing printed at 7.0930, versus a Bloomberg consensus of 7.1769.
- Today's fixing saw a -839pip error in USD/CNY terms delivered. This is tighter than yesterday's -892pip outcome. Recent wides in the fixing error term were at -983pips, so we are some distance from that, but the average fixing error was -621pips in Jan of this year.
- The actual fixing is the lowest since Jan 2.
- USD/CNH is relatively steady in the first part of trade, last near 7.1870 and little changed for the session, despite a softer USD/JPY tone seen in the majors.
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BONDS: AU-NZ 10Y Yield Differential Breaks Out Of Its 3M Range
Today, the NZ-US 10-year yield differential remains relatively stable, standing at +66bps, which is approximately 10bps wider than Friday's opening level. However, this places it close to the midpoint of the range observed over the last 12 months, which has fluctuated between +40 and +85bps.
- In contrast, the AU-NZ 10-year yield differential has reached its widest level since October, currently sitting at -68bps.
- Before Friday, this particular differential had fluctuated within a range of -30 to -60bps over the past three months.
- It's noteworthy that the 12-month high for this differential is approximately -100bps.
Figure 1: AU-NZ 10-Year Yield Differential
Source: MNI – Market News / Bloomberg
STIR: RBNZ Dated OIS Slightly Pare Friday’s Post-ANZ Forecast Firming
RBNZ dated OIS has slightly pared Friday’s significant firming, prompted by ANZ Bank's announcement that they expected the RBNZ to raise the official cash rate (OCR) by a cumulative 50bps (this month and in April), bringing the OCR to 6.0%.
- (DJ) The RBNZ warned in November that "If inflation pressures were to be stronger than anticipated, the OCR would likely need to increase further." Data since then has been a series of small but pretty consistent surprises in that direction, Zollner said. (See link ICYMI)
- A cumulative 61bps of easing is priced by year-end versus 69bps on Thursday. However, this is measured from a terminal OCR of 5.75% versus 5.58% on Thursday.
Figure 1: RBNZ Dated OIS Pricing (%)
Source: MNI – Market News / Bloomberg
AUSTRALIA: Focus On Thursday’s Labour Data
This week the focus will be on Thursday’s labour market data for January which is expected to partially unwind December’s drop. Survey data is also released this week.
- On Tuesday the RBA’s Kohler speaks at 0855 AEDT but after Governor Bullock appeared twice last week, she is unlikely to say anything new.
- Westpac’s measure of consumer confidence for February prints on Tuesday and will be watched for any reaction to the on hold RBA decision last week. January’s NAB business survey is also released and while confidence has been volatile, it will be monitored for a further deterioration in conditions and moves in the price/cost components.
- Employment is on Thursday and is expected to rise 30k in January after falling 65.1k with the labour force shrinking in December. The unemployment rate is forecast to tick up 0.1pp to 4% with the participation rate also rising 0.1pp to 66.9% after falling 0.5pp in December.
- February Melbourne Institute inflation expectations also print on Thursday. They were steady at 4.5% in January.
- Thursday also sees CBA’s household spending insights for January. The series has a strong correlation with the ABS’ retail sales.
