CNH: USD/CNH Back Under All Key EMAs As Onshore Markets Return

Oil prices have continued to rise during today’s APAC trading after rallying around a percent on Monday. WTI is 0.7% higher at $62.70/bbl, close to the intraday day high, and Brent is up 0.7% to $66.46/bbl. The USD index is 0.1% lower today, which is likely supportive of dollar-denominated crude.

• The IEA forecast a record market surplus for 2026, which has pressured oil prices. The EIA short-term energy outlook is published Tuesday with the IEA and OPEC monthly reports on Thursday. After OPEC’s weekend decision to increase its production target 137kbd, the projections in these reports will be watched closely.
• Saudi Arabia cut prices for October across grades for its Asian buyers after OPEC hiked output 2.2mbd over the last five months. This is another sign that the group is now focussed on regaining market share rather than managing prices. US shale producers have grown their share in recent years.
• Industry-based US inventory data is also out today.
• US benchmark revisions to payrolls are released later. US August NFIB small business optimism prints. The ECB’s Montagner & Machado and the BoE’s Breeden appear. 

The BBDXY has had a range of 1197.30 - 1198.68 in the Asia-Pac session, it is currently trading around 1197, -0.08%. The USD trades very heavy as the moves in US yields start to take their toll. The headwinds for the USD seem to be compounding and a look below 1195 feels almost inevitable. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows. Should the USD start another leg lower it would have big implications for FX and potentially see a lot of the recent ranges in G10 broken.

• EUR/USD -  Asian range 1.1759 - 1.1778, Asia is currently trading 1.1770. The pair continues to grind higher with focus turning back towards the range highs. EUR is still within its wider 1.1350-1.1850 range with a bias to the topside.
• GBP/USD - Asian range 1.3544 - 1.3574, Asia is currently dealing around 1.3570. The pair bounced strongly off its support around 1.3350 last week. The pair is grinding higher looking towards the top end of its 1.3350-1.3650 range. 
• USD/CNH - Asian range 7.1168 - 7.1238, the USD/CNY fix printed 7.1008, Asia is currently dealing around 7.1200. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
• Cross asset : SPX +0.10%, Gold $3652, US 10-Year 4.05%, BBDXY 1197, Crude Oil $62.66
• Data/Events : France Industrial Production MoM

Fig 1: BBDXY Spot Weekly Chart

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

Gold prices reached a new record high of $3654.57/oz during today’s APAC session but are currently around $3652.8 to be up 0.5% on the day. Friday’s disappointing US payroll data has bolstered Fed cut expectations with over 25bp now priced in for September 17 and almost 75bp by year end. The market is also waiting for the ruling on whether Fed Governor Cook can be removed. The US dollar is 0.1% lower today while yields are little changed.

• Gold held below resistance at $3674.8. Today’s US payroll revisions, Wednesday’s August PPI and Thursday’s CPI will be important for the rate outlook and thus for non-yield bearing bullion.
• ETF flows into gold have also pushed prices higher with Bloomberg reporting Monday’s inflows were the highest in close to 3 months.
• Silver is off its intraday low of $41.209 to be little changed around $41.35. It reached $41.419 earlier holding below resistance $41.467.
• Equities are mixed with the S&P e-mini is up 0.1% and Hang Seng +0.8% but CSI 300 down 0.5% and Jakarta Comp -1.6%. Oil prices are higher again with WTI +0.6% to $62.66/bbl. Copper is up 0.3%.
• US benchmark revisions to payrolls are released later. US August NFIB small business optimism prints. The ECB’s Montagner & Machado and the BoE’s Breeden appear.