CNH: USD/CNY Fixing Pushes Back Above 7.1300, Fixing Error Wider

• CHINA SETS YUAN CENTRAL PARITY AT 7.1414 WEDS VS 7.1460

The Westpac lead indicator for June fell 0.03% m/m following an upwardly-revised 0.05% rise. The 6-month rate, which leads detrended growth by 3 to 9 months, is hovering just above zero signalling that growth is likely to return to around trend towards year end. Westpac believes that sluggish growth and the Q2 CPI outcome on July 30 will enable the RBA to cut 25bp on August 12 but it will maintain a “gradual easing cycle”.

• The 6m/6m annualised change in the lead indicator printed at 0.03% in June down from 0.11%.
• Weaker commodity prices in AUD, consumer confidence, hours worked drove the moderation from December’s +0.33%. However, the ASX, lower rates and US IP have been supportive.
• Westpac is forecasting GDP growth of 1.7% in 2025 up only slightly from 2024’s 1.3%. 

Australia Westpac lead indicator vs real GDP %

This morning has seen US futures open slightly higher as President Trump announced a trade deal with Japan. The response is pretty muted considering how important this deal was seen, ESU5 +0.10%, NQU5 -0.05%. The AUD trades with little direction in the crosses, within ranges and looking for a catalyst to provide a clearer picture.

• EUR/AUD - Overnight range 1.7881 - 1.7974, Asia is currently trading around 1.7910. The pair pulled back overnight, EUR/AUD looks to be trying to build a base from which to test back above 1.8000 again.
• GBP/AUD - Overnight range 2.0618 - 2.0723, Asia is trading around 2.0630. The pair drifted lower after being capped towards the 2.0800 area. This pair is also now back within its wider 2.0450 - 2.1050 range, and lacking any clear direction.
• AUD/JPY - Overnight range 95.64 - 96.38, Asia is trading around 96.00. The pair continued to trade heavily overnight. The support has held though between 95.00 - 96.00 where demand has materialised first up, and the trade deal between the US and Japan should provide it with some tailwinds.
• AUD/NZD -  Overnight range 1.0917 - 1.0958, the cross is dealing in Asia around 1.0920. The cross moved higher in response to the NZ CPI. Dips back to 1.0850/1.0900 should continue to find support as the pair tries to build momentum to move higher.

Fig 1: AUD/JPY spot 120min Chart

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