CNH: USD/CNH Consolidates Post Sharp Dec Downtrend, CNY Basket Higher
Spot USD/CNH couldn't sustain sub 6.9800 levels on Tuesday as broader USD index levels recovered as the session unfolded. CNH outperformed higher dollar index levels though, with the currency little net changed for the session. The pair is around 6.9820 in early Wednesday trade, leaving recent ranges intact, although the strong downtrend evident in the pair has flatlined since the start of the year. Spot USD/CNY finished up at 6.9839 on Tuesday, while the CNY CFETS basket tracker climbed further to 98.35, fresh highs since April last year, as yuan outperformance continued.
- For spot USD/CNH, the recent consolidation has brought the RSI (14) back up from recent extremes, albeit still oversold at 26.4. For other technicals, all key EMAs remain in a downtrend, with the 20-day under 7.01. The 50-day is under 7.0500 and would likely need to be challenged to shift bullish CNH sentiment. Recent lows at 6.9664 remain intact.
- Our China policy team noted late yesterday: China should avoid using the yuan’s significant appreciation against the U.S. dollar as a policy tool to rebalance its trade surplus but should instead take measures to boost domestic demand, a prominent Chinese economist and foreign exchange expert told MNI, downplaying prospects for further significant one-way gains in the currency.
- Also note, the PBoC will retain a moderately accommodative stance in 2026, flexibly utilising reserve requirement ratios and interest rate reductions and maintaining ample liquidity to support the economy, according to a statement on its website on Tuesday.
- The local data calendar has FX reserves on tap for Dec, which usually print late in the session.
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NEW ZEALAND: November Activity Data Print & RBNZ Governor Speak This Week
While there is some Q3 data out this week, there are also some monthly data to gauge the progress of the recovery in Q4. Bloomberg includes a media Q&A by new RBNZ Governor Breman for Wednesday at 0810 NZDT.
- Q3 manufacturing activity and volumes print on Thursday ahead of 18 December’s Q3 GDP print. The sector shrank around 3% q/q in Q2 and contributed to the sharp 0.9% q/q contraction in GDP.
- On Friday the Business NZ manufacturing PMI for November is released and Monday 15 December for the performance of services index. In October, manufacturing printed its fourth consecutive month at 50 or above, while services returned to growth for the first time since November 2024.
- Card spending data have remained lacklustre and underperformed the official quarterly retail sales figures. Q3 values rose 1.7% q/q and volumes a robust 1.9% q/q. November card transactions are published on Friday.
- October net migration is published on Wednesday.
MNI: MNI JAPAN Q3 GDP REV -0.6% Q/Q; PRELIM -0.4%; MEDIAN -0.5%
- MNI JAPAN Q3 GDP REV -0.6% Q/Q; PRELIM -0.4%; MEDIAN -0.5%
- JAPAN Q3 ANNUALIZED GDP REV -2.3%; PRELIM -1.8%; MEDIAN -2.2%
AUSSIE BONDS: Jun-54 Supply Faces A Higher Yield But A Flatter 10/30 Curve
The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 18 November 2025 for A$300mn. Several key factors will likely shape investor demand at today’s auction:
- The bond’s outright yield is at a fresh cycle high, 20bps higher than the previous auction.
- Sentiment toward longer-dated global bonds has improved recently, which may add to demand.
- However, the 10s/30s yield curve is around 10bps flatter than the previous outing and almost 30bps below its recent high, its steepest level since 2021 — a potentially negative technical factor.
- Overall, pricing is expected to remain firm, underpinned by a stable yield profile and a more attractive curve backdrop.
- Results are due at 0000 GMT / 1100 AEST.
