CNH: USD/CNH Near 7.1800, CNY Basket Edges Lower
USD/CNH tracks near 7.1800 in early Friday dealings. The pair was little changed for Thursday's session, tracking familiar ranges. Broader USD sentiment was a touch weaker for Thursday's session. Focus remains on potential replacements for Fed Chair Powell (with current FOMC member Waller reportedly considered). Spot USD/CNY finished up at 7.1814, while the CNY CFETS basket tracker fell 0.19% to 96.20 (per BBG).
- Spot USD/CNH was supported under 7.1800 on Thursday as it has been for this week, but on the upside we couldn't test above 7.1900. Broader focus points are likely to rest with 7.2200 on the upside, which is the 200-day EMA, while downside focus will rest on a revisit sub 7.1500.
- Downside risks appear larger at this stage, given broader USD trends, while the USD/CNY fixing bias also appears skewed lower. Any move in the pair is likely to be gradual rather than dramatic. USD/CNH implied vol sits under 3% for the 1 month tenor, just up from cycle lows.
- Yesterday's July trade figures were better than expected, but uncertainty still rests with the domestic outlook, given on-going housing pressures and moderate retail spend. Tomorrow, the July inflation figures are out.
- US Commerce Secretary Lutnick stated that it was likely the US will extend the trade truce with China for another 90 days.
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AUSSIE 3-YEAR TECHS: (U5) Holds 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: 96.550 @ 16:02 BST Jul 08
- 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 traded weaker into last week’s close, but remain off lower levels for now. The recent strength is again challenging resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Instead, a continuation lower would strengthen a bearish theme. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would refocus attention on 96.860, the Apr 7 high.
ASIA: Coming Up In Wednesday's Asia Pac Session
| 0005BST | 0705HKT | 0905AEST | RBA's Hauser Speech |
| 0050BST | 0750HKT | 0950AEST | Japan June Money Stock |
| 0200BST | 0900HKT | 1100AEST | Australia 2035 Bond Sale |
| 0230BST | 0930HKT | 1130AEST | China June Inflation |
| 0300BST | 1000HKT | 1200AEST | New Zealand RBNZ Decision |
| 0430BST | 1130HKT | 1330AEST | Japan 6mth Bill Sale |
| 0700BST | 1400HKT | 1600AEST | Japan June P Machine Tool Orders |
US DATA: Used Vehicle Prices Picking Back Up
Used vehicle prices rose 1.6% M/M in June on a seasonally-adjusted basis, per Manheim Auctions data. That brought the index up 6.3% Y/Y to the highest level since October 2023.
- The report made note of volatility in wholesale used prices in Q2 given tariff impacts on new vehicle sales.
- Such wholesale used vehicle indices tend to lead CPI used vehicle prices by 2-3 months.
- In CPI, used vehicle prices have fallen for 3 consecutive months to May, reflecting a dropoff between December 2024 and March 2025 in the Manheim index.
- The latest reading suggests that prices may be on track to pick up by the end of Q3, adding pressure to broader goods CPI aggregates.
