CNH: USD/CNY Fixing Edges Up, Error Term Unchanged

• CHINA SETS YUAN CENTRAL PARITY AT 7.1409 WEDS VS 7.1366

Gold has climbed since the disappointing July US payrolls and increase in US tariffs on August 1. Prices are now 2.8% higher this month after rising 0.2% to $3380.60/oz on Tuesday supported by a weaker US dollar driven by a softer services ISM print. They fell during the European session to a low of $3349.96 before recovering to a high of $3390.52. Bullion has started Wednesday’s trading steady at $3380.0.

• Weaker US data has driven increased Fed rate cut expectations, now over 90% chance of September easing is priced in, supporting non-yield bearing bullion. With the US effective tariff rate higher and continued elevated uncertainty, the market will remain sensitive to disappointing data. July US services ISM fell to 50.1 from 50.8, signalling stagnation in the sector.
• Gold traded above initial resistance at $3385.4 on Tuesday but is now below that again. A clear break would open $3439.0.
• Silver outperformed rising 1.1% to $37.817 from an intraday low of $37.310. It has started today down slightly at $37.795. It continues to trade below initial resistance at $39.655 but the trend remains bullish. It has become a safe-haven proxy following gold’s strong rise earlier this year and it has also been boosted by increased physical demand from renewables production.
• The BBDXY USD index is currently flat today. Equities were mixed on Tuesday which has continued today with the Nikkei and S&P e-mini flat, KOSPI down 0.4% but ASX up 0.6%.Oil prices were down but WTI is up 0.3% to $65.33 today. Copper fell 1.3%.

The AOFM sells A$900mn of the 4.25% 21 March 2036 bond:

• Average Yield (%): 4.2569 (prev. 4.4476)
• High Yield (%): 4.2600 (prev. 4.4500)
• Bid/Cover: 3.3111x (prev. 4.0000x)
• Allotted at Highest Accepted Yld as % of Bid at Yld (%): 24.0 (prev. 18.9)
• Bidders: 33 (prev. 36), successful 18 (prev. 16), allocated in full 13 (prev. 8)