CNH: USD/CNH Capped By 20-day EMA Resistance, But Narrow Ranges Prevail
USD/CNH drifted lower post the Asia close on Thursday, tracking near 7.1860 in early Friday dealings. For Thursday trade CNH rose modestly, but continues to track recent ranges. Broader USD sentiment saw dollar indices finish down slightly, with US trade impacted by the Juneteenth holiday. Spot USD/CNY finished up at 7.1878 yesterday, while the CNY CFETS basket tracker rose a touch to 95.88.
- For USD/CNH, we remain within well worn ranges. On the topside we have been unable to sustain moves above the 20-day EMA (near 7.1925/30). Equally, we haven't been able to stay under 7.1700 so far in June.
- Thursday saw some outperformance from the EU bloc currencies, while AUD and NZD were weaker. CNH displayed its usual low beta with respect to such shifts.
- Focus remains on Middle East developments, with US President Trump stating he will decide within two weeks if he will strike Iran. WTI moved off highs on this news.
- Today in China we have the 1yr and 5yr LPR outcomes, with no change expected in either rate. The 1yr is at 3.0%, the 5yr at 3.5%. Next week the data calendar is fairly light with May industrial profits due.
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OIL: Industry Data Show Crude Stock Build While Products Decline
After a previous large crude inventory build, Bloomberg reported that another 2.5mn barrels were added in the US, according to people familiar with the API data. However, there was a 443k drawdown at Cushing and gasoline stocks fell 3.24mn and distillate 1.4mn suggesting still robust demand. The official EIA data is out later today.
AUSSIE 3-YEAR TECHS: (M5) Rallies Off Lower Levels
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.530 @ 16:22 BST May 20
- SUP 1: 95.900 - Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures rallied off lower levels on the RBA rate cut and guidance, however prices remain south of the 50-dma for now. The recent rally took out resistance at 96.730, the Sep 17 ‘24 high, however momentum faltered, leaving 96.860 resistance intact. A continuation lower would strengthen a bearish theme. This would refocus attention on 95.760, the 14 Nov ‘24 low. A reversal higher would refocus attention on 96.860, the Apr 7 high.
NEW ZEALAND: Whole Milk Auction Prices Eases From Cycle Highs
Overnight the fortnightly GDT auction saw whole milk prices dip to $4332 from $4374 prior. This is a 1% fall. It leaves prices just off multi year highs, see the chart below, where the whole milk auction price is plotted against the Citi terms of trade proxy for NZ.
- BBG noted: "The GDT price index change, which is a weighted average of the percentage changes in individual milk products between trading events, was a decrease of 0.9%"
- Note later on this morning we get April trade figures for NZ. The trade balance position has improved in recent months, with the March surplus the highest since 2020.
Fig 1: GDT Whole Milk Powder Prices & Citi NZ Terms of Trade Proxy
Source: Citi/MNI - Market News/Bloomberg
