CNH: USD/CNH Wedged Between Key EMAs, Home Price Data Out Today

• NZD/USD fell 0.39% on Friday to 0.5585, raising doubts about its ability to test/hold above the 20-day EMA near 0.5625. Mixed momentum signals suggest uncertainty with the RSI dropping back below 40, reflecting renewed bearish pressure, while the MACD histogram shows rising green bars, hinting at lingering but weak bullish sentiment.
• It is a public holiday in the US today, focus will be on US President-elect Donald Trump being in as the 47th President of the United States, with all eyes on any executive orders he enacts on day 1, he has mentioned he plans to sign up to 100 on day 1.
• Descending trendline resistance in the NZD/USD has yet to be really tested since the sell-off kicked off in October. A close above 0.5693 (Jan 7 high) is needed to build a short-term base at the 0.5542 (Jan. 13 low)
• Speculative positions on the NZD showed slight improvement, with net positions rising to -52.1K on January 17, 2025, from -54.6K previously, according to CFTC data. While still bearish, the marginal reduction in short positions suggests easing negative sentiment.
• No large nearby strikes Monday, Upcoming notable strikes: 0.5475 (NZD450m Jan. 22), 0.5675 (NZD400m Jan. 23), 0.5635 (NZD349.1m Jan. 21)
• RBNZ dated OIS is pricing in an 88% chance of a 50bps cut in Feb, with 72bps of cumulative cuts priced by April, while the November meeting has a total of 113bps of cuts priced.
• The NZ-US 2yr swap saw a sharp reversal last week, hitting a low of -94.5bps, we last trade at -66bps.
• There is little on the calendar today, with focus turning to Wednesday CPI numbers.

• It is likely that ahead of the Chinese New Year period coupled with pressure on CNY there will be little movement in today’s Prime Rates.
• The Prime Rate is the preferential lending rate offered by commercial banks to the prime customers and is calculated based on 18 commercial banks averaging the rates provided by commercial banks.
• Whilst the PBOC have now moved to a ‘loose’ monetary stance for the first time in more than a decade, market expectations are for moderate changes to policy.
• With economic data showing signs of recovery (last week’s GDP ahead of expectations, retail sales on improving trend) it would seem likely that policy maintains the status quo for now, rather than cutting at a time when policy uncertainty exists for the Federal Reserve’s path for interest rates. 

Yen's gains for last week were pared through Friday trade. Yen lost a little over 0.70% for the session. We track near 156.25/30 in early Monday dealings, little changed from end Friday levels in NY. Yen was still up 0.90% last week, the best performer in the G10 space. 

• Last week's pullback in USD/JPY didn't breach the 50-day EMA support zone (154.92). This leaves the pullback corrective, at least for now. A return higher and a breach of 158.87, the Jan 10 high, would confirm a resumption of the uptrend and open 159.45, the Jul 12 ‘24 high. These highs are some distance away though.  
• EUR/JPY recovered some ground on Friday, testing around 161.00, which weighed on yen performance. USD sentiment softened as headlines crossed of a Trump-Xi phone call. This aided broader risk appetite, as descriptions of a positive tone for China/US relations provided a boost. Global equities were higher, the SPX rose 1.00%. However, aggregate USD weakness was contained. The USD BBDXY index only fell a modest 0.23% last week.
• Locally, we have core machine orders on tap today for Nov, along with Nov final IP and capacity utilization. The tertiary index for Nov also prints. This comes ahead of Friday's BoJ meeting outcome, where the economic consensus and market pricing has shifted to strong hike odds.
• Closer focus will rest on Trump's upcoming inauguration, with FX and broader market risk sentiment likely most sensitive to any tariff announcements.