CNH: USD/CNH Near 7.2700, Onshore Markets Closed For Labor Day Holidays
USD/CNH tracks near 7.2700 in early Thursday dealings. The CNH was little changed for Wednesday's session, with the pair tracking recent ranges (supported sub 7.2600, while finding offers above 7.2750). Broader USD indices ticked up, the DXY nearly 0.40% firmer, while the BBDXY was a little over 0.10% higher. US data was mixed, while month end could have also played a role.
- USD/CNY finished up at 7.2714, leaving little basis differential with CNH. The CNY CFETS basket tracker was little changed at 96.20.
- For USD/CNH technicals, we just under the 100-day EMA (7.2740/45), with the 200-day further south close to 7.2540. This support level hasn't been tested yet on this most recent run lower.
- Focus remains on tariffs. "The US has been proactively reaching out to China for tariff talks, CCTV reported. Meanwhile, Trump said a call with Xi Jinping "will happen." (per BBG). Earlier remains on Fox News from US Trade Representative Greer stated that official talks with China have not commenced yet.
- Note China markets are closed for the next 3 trading sessions, for the Labor Day holiday period. They return next Tuesday on May 6.
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JAPAN DATA: Jobless Rate Ticks Lower, But So Does Job-to-Applicant Ratio
Japan's jobless rate for Feb ticked down to 2.4%, versus a 2.5% forecast and 2.5% (which was also the prior outcome). This puts the jobless rate back at 2024 lows, which was fresh cycle lows back to late 2019. This indicates a still tight labor market for Japan.
- The job-to-applicant ratio painted a less positive picture though. It eased to 1.24, versus a 1.26 forecast and prior 1.26 outcome. The chart below plots this index, which is inverted on the chart, against the jobless rate. the two series are diverging somewhat from norms, as we usually see a higher job-to-applicant ratio associated with lower unemployment rates.
- The new job-to-applicant ratio also ticked down, but remains close to recent highs.
Fig 1: Japan Jobless Rate & Job-To-Applicant Ratio (Inverted) Diverging Somewhat
Source: MNI - Market News/Bloomberg
JGBS: Futures Cheaper Overnight, US Tsys Finish Mid-Range, Fall In UE Rate
In post-Tokyo trade, JGB futures closed weaker, -9 compared to settlement levels.
- February’s Jobless Rate and Job-To-Applicant Ratio have printed showing 2.4% and 1.24 respectively versus estimates of 2.5% and 1.26 and priors 2.5% and 1.26.
- The BoJ announced late yesterday that it would curb super-long bond buys (see this BBG link, ICMYI).
- Overnight, US tsys finished the NY session modestly richer but mid-range, with the 10-year yield 4bps lower at 4.21% and the 2-year at 3.89%, -3bps.
- Month/quarter end rebalancing flow tempered Monday morning's risk-off support ahead of Wednesday's US tariff deadline, with the 10-year yield 4bps lower at 4.21% and the 2-year at 3.89%, -3bps.
- Multiple reports suggested that Trump may be pressing his team to devise an aggressive 'Liberation Day' tariff plan that applies to more countries than anticipated.
- There was little reaction to the slightly higher-than-expected Chicago PMI data, with the barometer advancing 2.1 points to 47.6 in March.
- Little news from late session Fed speakers Williams and Barkin: "We need an open mind about how long tariff impacts last," Williams said, while "to cut rates, we got to have confidence in inflation."
- Today, the local calendar will also see the Tankan Survey and Jibun Bank PMI Mfg data.
MNI: MNI JAPAN FEB JOBLESS RATE FALLS TO 2.4% FROM JAN 2.5%
- MNI JAPAN FEB JOBLESS RATE FALLS TO 2.4% FROM JAN 2.5%
