CNY: USD/CNY Fixing Edges Up Wednesday

• CHINA SETS YUAN CENTRAL PARITY AT 7.0523 TUE VS 7.0572

JGB futures are ticking up in early Tuesday dealings, extending the bounce from yesterday's cycle lows. We were last 132.69, +.29 versus settlement levels. This looks to be a a modest correction after the recent sharp sell-off which kicked off post Friday's BoJ decision. US Tsy futures also have a modest positive bias so far today, which may be lending some support at the margins. 

• Pre BoJ highs in JGB futures were close to 133.50 last week, which may be an upside target if this move extends more, although the broader bearish technical backdrop is still likely to dominate.
• Today's correction in futures higher has pushed the RSI (14) back above oversold territory, albeit just (31.4).
• In the cash JGB space, yields are lower across most tenors, with 7-10yr tenors off around 3bps, while the 20-40yr tenors are down 2-3bps. The 10yr outright yield was last around 2.05%, versus recent cycle highs just above 2.10%. 

The BBDXY range overnight was 1204.81 - 1209.16, Asia is currently trading around {BBDXY Index}. The USD stalled up toward the 1210 area to start the week and has very quickly reverted lower. The move last week had more to do with the surge higher in USD/JPY than any real USD strength as the moves elsewhere in currencies and more importantly in metals attest to. Robin Brook made an important point on Friday, take out the JPY in the USD basket and the USD is falling a lot more than is being appreciated. On the day, I suspect rallies to be faded while the 1210 area holds. First sell-zone is between 1207-1209, can this 1203-1204 area continue to provide support if not a move below here would target 1198-1200. 

• Bloomberg - “Check out this chart -- the dollar stands to lose ground if Trump’s tariffs are overturned, according to our poll” See Chart Below
• The BBDXY Average True Range for the last 10 Trading days: 370 Points

Fig 1: Bloomberg Tariff Unwind Poll

Source: MNI - Market News/Bloomberg Finance L.P