CNH: USD/CNH Holding Above 7.1600, CNY Basket Makes Fresh Lows
Spot USD/CNH tracks close to 7.1600 in early Wednesday dealings. CNH lost a little ground on Tuesday's session, as broader USD sentiment improved after dollar indices made fresh cycle lows in late Asia Pac trading yesterday. Spot USD/CNY finished up at 7.1658, while the CNY CFETS basket tracker fell a further 0.21% to 95.15, fresh cycle lows back to early 2021. Broader USD sentiment was aided by positive US data outcomes, which pushed Tsy yields firmer and technical support holding in the DXY index.
- For spot USD/CNH, the downtrend in the pair, which has been in play since mid June, still looks intact. Yesterday's low near 7.1500 will be a near term downside focus point. On the upside, since early June, we have seen selling interest emerge around the 20-day EMA resistance point, which sits near 7.1770/75.
- EUR/CNH made fresh highs above 8.4600 before retracing, but was supported on dips. We sit above 8.4530 in early Wednesday dealings. CNH/JPY dipped under 20.00 but found support.
- Yesterday's USD/CNY fixing was close to market expectations, which suggests the authorities are comfortably with a modest pace of USD/CNY downside amidst a softer USD backdrop.
- The local data calendar is quiet today, with the Caixin Services PMI out tomorrow.
- US trade talks are centered on developments with Japan at the moment, while US Tsy Secretary Bessent stated he was hopeful China would do more to boost rare earth exports (in a Fox News interview).
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ASIA: Coming Up In Asia-Pacific Markets On Monday
2300GMT 0700HKT 0900AEDT Australia S&P Global PMI Mfg May F
2350GMT 0750HKT 0950AEDT Japan Capital Spending Q1
2350GMT 0750HKT 0950AEDT Japan Company Sales/Profits Q1
0030GMT 0830HKT 1030AEDT Japan Jibun Bank PMI Mfg May F
0100GMT 0900HKT 1100AEDT Australia MI Inflation Gauge May
0130GMT 0930HKT 1130AEDT Australia ANZ-Indeed Job Ads May
0200GMT 1000HKT 1200AEDT South Korea Sell KRW2.3tln 2-Yr Bonds
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: 96.650 @ 14:56 BST May 30
- 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 last week, 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. This remains the key level to the upside. Instead, 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.
AUSSIE 10-YEAR TECHS: (M5) Bear Cycle Remains Intact For Now
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.745 @ 14:57 BST May 30
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures rallied well on the RBA rate decision last week, reversing a small part of recent weakness. Recent price action pressured prices through to new pullback lows last week. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. To the upside, a recovery of recent losses would shift attention to resistance at 96.207, a Fibonacci retracement point.
