CNH: USD/CNY Fixing Dips Under 7.1700

The USD/CNY fix printed at 7.1937, versus a BBG market consensus of 7.2181.

• This is little changed on yesterday's outcome (7.1931), while the fixing error widened slightly to -244pips, from -176pips yesterday.
• USD/CNH is a little changed in early dealings, last near 7.2160. CNH is lagging continued USD softness. Earlier headlines crossed from the MOFCOM stating that the US is abusing export controls in the chip sector and that China will protect its interest in the space.

• CHINA SETS YUAN CENTRAL PARITY AT 7.1937 WED VS 7.1931

The April Westpac leading indicator was flat on the month but after falling 0.15% in March, the annualised 6-month rate eased to 0.19%, the lowest since October. This latter measure leads detrended growth by three to nine months and so suggests activity could slow in H2 but it is indicating that H1 should be stronger than late 2024. Westpac observes that the weaker index reflects recent global developments but currently through markets and sentiment.

• The RBA revised down its 2025 growth outlook in its May forecasts with Q4 2025 now expected to be 0.3pp lower than February at 2.1% due to a softer consumer recovery and heightened global uncertainty. These were significant reasons behind yesterday’s 25bp rate cut.
• Westpac expects GDP to be 1.9% y/y in Q4 2025 up from 1.3% y/y in Q4 2024 but lower than the RBA is projecting. It believes that the central bank will “take a cautious, measured approach to policy easing” and be on hold in July as it waits for Q2 CPI data on July 30.
• The largest negative contributions to the 6-month rate of the lead indicator came from equities, consumer confidence/unemployment expectations and hours worked, while US IP, the Australian yield spread and AUD commodity prices were positive.

Australia Westpac leading indicator vs real GDP growth %