CNH: USD/CNH Supported Sub 7.1700 As Market Digests Xi/Trump Call

Headlines have crossed that US and China officials will meet this week to discuss trade. 

• From our policy team: US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will meet with China's "lead representative on economic matters" later this week in Switzerland, according to statements released Tuesday.
• "While in Switzerland, Secretary Bessent will also meet with the lead representative on economic matters from the People's Republic of China," the statement from the Treasury Department said. Greer "will also meet with his counterpart from the People's Republic of China to discuss trade matters" while in Geneva, his office said.
• From the China side: "*CHINA DECIDES TO TALK TO US AFTER GLOBAL, CHINA INTEREST" - BBG,"*CHINA SAYS ANY TALKS HAVE TO BE EQUAL, BENEFIT EACH OTHER" - BBG, "*CHINA SAYS WON'T SACRIFICE ITS PRINCIPLES TO SEEK AGREEMENT" - BBG.
• Markets are reacting positively, with a risk on tone in the FX space. JPY and CHF are both off around 0.45-0.50%, with USD/JPY back above 143.00. AUD and NZD are holding up, while USD/CNH is back under 7.1900. US equity futures have risen, SPX last +0.80%. 

AUDUSD rose 0.4% to 0.6494 on Tuesday, as the USD fell 0.4%, after reaching 0.6501 but was unable to hold the break above 65c. News in early APAC trading that US Treasury Secretary Bessent and Trade Representative Greer will meet China’s Vice Premier Lifeng later this week to discuss a trade deal. The hope of a resolution has driven risk-sensitive assets higher and AUDUSD is up 0.2% to 0.6508 after 0.6515 earlier today. The USD has responded with the BBDXY up 0.2%.

• With AUDUSD trading above 0.6500, the next level to watch is 0.6528, 29 November high. Initial support is at 0.6366, 20-day EMA.
• The yen outperformed on Tuesday with AUDJPY falling 0.5% to 92.49 off the intraday low of 92.12. The yen is weaker following the US-China trade news and so AUDJPY has jumped 0.7% to 93.16 in APAC trading.
• AUDNZD fell 0.25% to 1.0811 yesterday after reaching 1.0781. Today is 0.1% higher at 1.0824 off the peak of 1.0832.
• EURUSD is lower this morning driving AUDEUR up 0.4% to 0.5733 but it reached 0.5752 earlier. On Tuesday it fell 0.1% to 0.5712 off the intraday low of 0.5689. AUDGBP is up 0.3% today to 0.4873 after rising to 0.4881 earlier.
• Equity futures are higher with the S&P e-mini up 0.8% and NASDAQ +1.0%. Oil prices are higher today with WTI +0.7% to $59.51. Copper is up 0.5% and iron ore around $99/t.
• There are no data or events in Australia today.

While employment printed as expected rising 0.1% q/q, the unemployment rate was lower than consensus holding steady at 5.1%. Private wages slowed to 0.4% q/q, which was less than forecast. The participation rate fell 0.1pp to 70.8%. See Statistics NZ press release here. More details to follow.