CNH: USD/CNY Fixing Narrows Again, USD/CNH Steady in Morning Trade

• CHINA SETS YUAN CENTRAL PARITY AT 7.0856 MON VS 7.0836

The Friday night range was 21.4738 - 21.5519, Asia is currently trading around 21.5900.  The pair has found some solid demand on the retracement back toward the 21.40/45 area. With risk taking a leg higher this morning as the market eyes a potential end to the US shutdown, Cross-Yen has reacted higher as you would expect. I thought the pullback in CNH/JPY would be a little deeper than that looking for a move back towards the 21.20-21.30 area. But With the 21.40 Area holding the focus should now return back to the 21.70/75 resistance area a break of which is needed to have a look toward the highs of 2024 seen around the 22.20 area.

Fig 1 : CNH/JPY Daily Chart

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

Bond are weak on the news that the government shutdown may be ending, with yields up across the curve at the opening of cash trading in Asia.  

Bonds future are weak with TYZ5 down -07+ at 112-20+, unable to hold above the 50-day EMA and back below.  The 100-day EMA is below at 112-12+.  Volumes are low at this stage, potentially exacerbating the move. 

Cash is seeing yields higher by 2.5 - 3.0bps across the curve in a fairly uniformed move, though like futures, volumes are low.  

• The 2-Yr is up +2.7bps to 3.591%
• The 5-Yr is up +3bps to 3.715%
• The 10-Yr is up at 4.128%, +3bps higher
• The 30-Yr is up +2.6bps to 4.727%