CNH: USD/CNH - Finds Support Just Below 6.9500, Rallies Remain Heavy

• Commercial banks in China are forecast to leave their 1-Yr and 5-Yr prime rates steady today, marking a seventh consecutive month of no change.
• With no policy action from the Central Bank since May, there appears little momentum for change today.  Bank margins have been pressurized particularly in the latter part of 2025 and with the uncertainty around the property developer Vanke looming large, banks will be unlikely to want to cut rates here.  
• A mixed review of the state of economic data prevails, yet with the economy remaining likely to hit the 5% GDP growth target there is no need to rush on policy.  
• Recent policy meetings on the economy confirmed "more of the same" suggesting that any expectations for imminent rate cuts or LPR reductions, may be disappointed.
• We see no change today with the 1-Yr LPR remaining at 3.00% and the 5-Yr at LPR 3.50%.  

US Bond Futures all  finished Friday lower.  The 10-Yr was down -08 to 112-16, whilst finishing +11 up for the week.  TYH6 has remained wedged between its upper resistance from the 20-day EMA at 112-19+ and the 100-day EMA at 112-14+.  TYH6 has opened the trading day in Asia at flat at 112-15+ with low volume.  

Friday saw yields give back Thursday's gains as investors weighed FED Speakers comments, and what was generally weaker data, though there was a lot to digest as equities staged a modest rally, CPI was still being deciphered and the US threats on Venezuela considered.  

• The 2-Yr finished at 3.485% : +2.3bps Friday and down 4bps for the week.
• The 5-Yr finished at 3.69% : + 3.2bps Friday and down 5bps for the week.
• The 10-Yr finished at 4.149%: +2.5bps Friday and down 4bps for the week.  
• The 30-Yr finished at 4.826%: +2.1bps Friday and down 2bps for the week.  

In a week where CPI was viewed as weaker than expected (even given the delay), Friday's move in context of an overall lower week for yields as holidays approach, looked potentially like investors taking profit.  

Some key FEDSPeak late last week gave two differencing views as to the path of interest rates.  

• A string of Federal Reserve interest rate cuts have positioned the central bank well to gather more economic data, and there's no urgency to act further now, New York Fed President John Williams said Friday, after data showed inflation and the labor market both softened in November.  Monetary policy is really well positioned right now to gather more information," he said in a CNBC interview. "I don't personally have a sense of urgency to need to act further on monetary policy further right now because the cuts we've made have positioned us really well."
• Federal Reserve Bank of Chicago President Austan Goolsbee said Thursday he remains optimistic that interest rates can come down a significant amount over the next year, but stressed he needs some more assurance that inflation is on track to the central bank's 2% goal.   "This a lot to like" about the November CPI report released Thursday, said Goolsbee in an interview with Fox Business. "But we are going to want to see progress in services and progress in a couple of places on a sustained basis."
• Federal Reserve Bank of Cleveland President Beth Hammack said monetary policy is in a good place to pause and assess the effects of 75 basis points of rate cuts in the economy.  Hammack is focused on getting inflation back to target, which is one of the primary objectives, and policymakers received economic data that showed the core consumer price index rose 2.6% year-on-year in November.  Hammack said she doesn't put much weight on any single economic report and wants to take time to see how the broader picture comes in before the next meeting.  (as per BBG)

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12  
• PRICE: 95.770 @ 14:59 GMT Dec 19
• SUP 1: 95.755 - Low Dec 10
• SUP 2: 95.480 - Low 1st Nov ‘23
• SUP 3: 94.932 - 1.0% 10-dma envelope

Prices printed fresh pullback lows last week, prompting the active contract to take out notable support into 95.760 and clear through to new multi-year lows. The slower pricing for additional RBA easing - and partial pricing for a return to rate hikes next year - should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support.