CNH: USD/CNY Fixing Makes Fresh YTD Low, USD/CNH Steady With USD/JPY Higher
The USD/CNY fix hit another fresh YTD low of 7.0918. The market consensus was 7.1226, leaving the fixing error close to recent wides, printing at -308pips. The chart below shows the fixing trend and the USD BBDXY index level. The fixing bias remains skewed lower, despite higher USD index levels. This should help keep USD/CNH upticks capped, but reaction post today's fixing is limited. We are holding near 7.1250/55 in latest dealings, unchanged for the session. Broader USD sentiment is a little firmer, notably against the yen, with USD/JPY pushing towards 152.40, which is likely lending some support to USD/CNY.
Fig 1: USD/CNY Fixing & BBDXY Index
Source: Bloomberg Finance L.P./MNI
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AUSSIE BONDS: ACGB Jun-54 Auction Goes Smoothly
Today’s auction result extended the recent trend of firm pricing for ACGBs, with the weighted average yield printing 0.68bps through prevailing mids, according to Yieldbroker. Moreover, demand improved, as reflected by a cover ratio of 3.3500x, up from 3.0000x from the previous auction.
- The bond’s outright yield was approximately the same as the previous auction and remained around 10-15bps below the peak reached in May.
- However, the 10s/30s yield curve had flattened slightly since the last auction but still sat at its steepest level since 2021 — a potentially supportive technical factor.
- Sentiment toward longer-dated global bonds had improved, which may have assisted demand.
- In the wake of the auction, the ACGB Jun-54 has traded slightly richer in the secondary market.
CHINA SETS YUAN CENTRAL PARITY AT 7.1057 TUES VS 7.1106
- CHINA SETS YUAN CENTRAL PARITY AT 7.1057 TUES VS 7.1106
CNH: USD/CNY Fixing Lower, Fixing Error Slightly Tighter
The USD/CNY fix printed at 7.1057, versus a BBG market consensus estimate of 7.1087.
- The dip in the fixing is consistent with USD softness, but was broadly in line with the dip in the market estimate (relative to Monday's market expectation). The fixing error was slightly tighter at -30pips (Monday's outcome was -51pips).
- The fixing holds within recent ranges, with focus likely to remain on downside move sub 7.1000.
- USD/CNH has been relatively steady in the first part of Tuesday dealings, last near 7.1155.
