ASIA FX: USD/CNH Steady, No lasting Benefit From Firmer Equities
Jan-23 04:59
FX trends in North East Asia have been steady, much like the G10 space. USD/CNH saw a brief dip sub 7.2800, but we were supported. The pair last near 7.2825/30, little changed for the session.
- There was a host of earlier China headlines, largely related to supporting longer term trends of the China equity market, with more insurance funds to be guided into the market. The CSI 300 is up around 0.60%, but off earlier highs. This provided some support for CNH, but follow through was limited. Market focus also rested on the Trump interview with Fox News, but little was mentioned on trade/tariff issues (Trump did defend TikTok during the interview).
- Spot USD/KRW is currently tracking near 1436/37, similar levels to this time yesterday. Earlier Q4 GDP data was weaker than forecast, but didn't impact won sentiment negatively. local equities are down, after SK Hynix results didn't meet lofty expectations. We have seen -$473mn in equity outflows so far today.
- South Korea also issued its first won bond in 21 year, aimed aiding won defence. BBG noted : "Officials sold an initial 800-billion-won tranche of one-year securities on Thursday to top up the country’s foreign exchange stabilization fund, which authorities use to fund interventions to quash volatility in the won."
- USD/TWD is holding in the 32.75/80 region, little changed for the session. Its local equity bourse is outperforming the Kospi, but this isn't translating into TWD outperformance at this stage.
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Cash Bonds Slightly Richer Ahead Of Holiday
Dec-24 04:54
TYH5 is 108-18, +0-03 from NY closing levels.
- Cash bonds are flat to 1bp richer in today’s Asia-Pac session after yesterday’s heavy session.
- Benchmark yields finished yesterday 3-7bps higher, with the 7-year leading.
- Today will see Philadelphia Fed Non-Manufacturing Activity and Richmond Fed Manufacturing Index alongside Tsy $28B 2Y FRN & $70B 5Y Note auctions.
GOLD: Gold Edges Higher on Light Volumes.
Dec-24 04:52
- As the US averted a shutdown data released shows the US consumer’s confidence has slipped for the first time in three months on concerns that the Trump administration will create uncertainty with their policies.
- The Consumer confidence index dipped to 104.7 from 111.7 in the month prior and headline durable good figure of -1.1% MoM was viewed as a miss and despite the data, bonds sold off taking gold with it.
- Opening at $2,612.29 in light volumes it drifted up to $2,619.85.
- Having had a strong year on the outlook for rate cuts, the next few months for gold will hinge on the ability of the Fed Reserve to deliver rate cuts in 2025 and the subsequent impact on the USD.
Subdued Session, Limited Reaction To BOJ Minutes (Oct)
Dec-24 04:51
JGB futures are weaker, -14 compared to settlement levels
- Outside of the BOJ Minutes for the October MPM, there hasn't been much by way of domestic drivers to flag.
- The BOJ minutes revealed that one member noted market rates might be lower than appropriate given the BOJ's economic and price projections and its monetary policy guidance. Another member highlighted the difficulty in confidently projecting medium- to long-term rate hikes due to uncertainties about Japan's neutral rate and the transmission mechanism of monetary policy.
- The local calendar will also see later Dept Store Sales alongside an Auction for Enhanced-Liquidity 15.5-39 YR.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s heavy session.
- Cash JGBs are 1bp higher to 2bps lower across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.5bp higher at 1.08% versus the cycle high of 1.113%.
- The swaps curve has twist-flattened, pivoting at the 10-year, with rates 1bp lower to 4bps higher.
- Tomorrow, the local calendar will see PPI Services and Coincident/Leading Indices alongside BOJ Rinban Operations covering 3-10-year and 25-year+ JGBs.
