CNH: USD/CNH Makes Another Fresh Low, Downside Focus Remains On 7.00
Spot USD/CNH got to fresh lows of 7.0315 as Tuesday trade unfolded, before some support unfolded as the US session progressed. We track close to 7.0360 in early Wednesday dealings (after a 0.10% gain for Tuesday). Broader USD/CNH downside technical risks prevail for the pair, with focus likely to remain on whether we can test 7.00 before year end. Broader USD indices remained softer, the BBDXY off around 0.10%, albeit in a volatile session as the market digested US jobs data. USD/CNY spot finished up at 7.0426, while the CNY CFETS basket tracker edged down a little to 97.64 (which is more in line with recent broader USD softness).
- In terms of topside resistance in USD/CNH, the 20-day EMA is near 7.0665/70, while we had a number of highs around the 7.0700/7.0800 region in the first part of Dec as well.
- US-CH yield differentials have edged lower in recent sessions but remain within recent ranges., the 2yr spread around +208bps. CNH gains continue to diverge from relative China equity underperformance but the market is more focused on yuan appreciation trends to address strong external balances.
- The local data calendar only has FDI for Nov on tap (out today or tomorrow per BBG).
- Focus will remain on the USD/CNY fix for any fresh signs of more meaningful pushback on appreciation pressures.
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JGBS: Futures Weaker Overnight Friday Ahead Q3 GDP, Y17Tn Econ Stimulus
In post-Tokyo trade on Friday, JGB futures closed weaker by -6 compared to settlement levels, after US tsys finished with a modest bear-steepener.
- With the US federal government shutdown now over, some postponed data is starting to come into view, with the BLS scheduling September's delayed nonfarm payrolls report for next Thursday.
- Friday's Fed commentary (with the usual exception of Gov Miran) was hawkish, with Dallas's Logan and KC's Schmid reiterating their opposition to a December rate cut, largely out of concern over entrenched inflation. A December cut remained around 50/50 priced.
- "The Finance Ministry plans an economic package worth about ¥17 trillion ($110 billion), the Nikkei reported on Saturday, without identifying its sources. The supplementary budget to fund the spending is expected to reach about ¥14 trillion, exceeding last year’s ¥13.9 trillion compiled under former Prime Minister Shigeru Ishiba, the report said." - BBG
- Today, the local calendar will feature Q3 GDP (P), Capu (Sep), IP (Sep), and 10-year Inflation-Linked supply.
- MNI: Japan Q3 GDP - Growth is projected to be negative in the quarter, amid weaker business spending and a drag .
AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.530 @ 15:33 GMT Nov 14
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower again overnight on the back of hotter-than-expected jobs data, compounding the impact of the inflation data earlier in the month. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
US TSYS: Futures Re-Open Little Changed
TYZ5 is dealing at 112-18, +0-01 from closing levels in today's Asia-Pac session.
- MNI Tech: US tsy futures (TYZ5) have once again challenged resistance at the 113-02 level, an area of congestion since Nov 5. A clear move above this hurdle would be a bullish signal and shift focus on resistance at 113-18+, the Oct 28 high. A break would also cancel a short-term bear theme. For bears, reversal lower would instead open 112-10, the 100-DMA and 112-06, the Sep 25 low. Trendline support lies at 112-04+.
- On Friday, US tsys finished showing a modest bear-steeper, with benchmark yields 1-4bps higher.
- With the US federal government shutdown now over, some postponed data is starting to come into view, with the BLS scheduling September's delayed nonfarm payrolls report for next Thursday, and the Census Bureau set to publish some delayed August data next week. Still, there's no official word on the fate of the October CPI release, which looks very likely to be cancelled altogether.
- Bitcoin has opened below $95k, with the technical setup looking a little ominous short-term. This could add to the current broader market malaise.
