CNY: USD/CNY Hits New YTD Lows as Fix Support Carries Through to NY Hours
Aug-28 14:26
- A renewed phase of USD sales in recent trade has USD/CNH again pressured to new pullback - and year-to-date lows - of 7.1212. Much market focus remains on the PBOC fix overnight, which was marked higher (USD/CNY lower) relative to expectations - making for the strongest CNY fix since November of last year (down to 7.1063 from 7.1108).
- The stronger CNY fix provides more evidence that Chinese authorities are endorsing and pursuing strength in the currency in the context higher global trade tensions (Mexico are set to join the US in raising tariffs on Chinese imports) and as China's top trade negotiator Li Chenggang has travelled to Washington this week for talks with US officials. While no groundbreaking trade deal news is expected, it is a further sign of warmer relations, and sets up a Trump-Xi summit later this year.
- This week's move puts USD/CNH price below the 61.8% retracement for the upleg posted off the September low of 6.9713.
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US DATA: Hire Rates Extend Push Lower In A Net Dovish JOLTS Report
Jul-29 14:16
The JOLTS report for June was soft across the board. The ratio of openings to unemployed continued to show signs of stabilization rather than deterioration, broadly holding levels seen for the past year, but hire rates in particular cooled further. The latter leaves greater susceptibility to any slowdown in economic activity.
- Job openings were a little lower than expected in June at 7437k (sa, cons 7,500k) after an unrevised 7769k in May.
- That decline on the month meant that the ratio of openings to unemployed was broadly unchanged at 1.06 after an unrevised 1.07 despite the already known 222k decline in unemployment in last month’s payrolls report.
- It remains close to the recent low of 1.02 in March and represents continued recent stability rather than any further moderation, having averaged 1.07 since Jun 2024. For context, it averaged 1.2 in 2019 and 1.0 in 2017-18.
- The quit rate eased to 1.97% from a marginally downward revised 2.049% that was exacerbated by rounding having initially reported at 2.06%. This is the lowest quit rate since December after some surprise increases which helped see a recent high of 2.10% in March.
- There’s a similar story for the private sector quits rate, at 2.19% after 2.27% for also its lowest since December. Whilst a small portion of the labor market, the federal quit rate dipped back to 0.5% but remains unchanged from the 2024 average prior to DOGE efforts.
- Hire rates are the most dovish aspect of the release in our minds, falling to 3.26% from 3.42% (revised down from 3.45%). This is the lowest since Jun 2024, Apr 2020 and before that 2013, whilst it compares with pre-pandemic averages in the 3.8-3.9% range for other periods of labor market tightness.
- Fed Chair Powell has in the past warned that whilst the labor market remains resilient, any downturn could see a faster deterioration in the labor market considering the already low nature of hire rates.
EUR: FX Exchange Traded Downside Option
Jul-29 14:10
EURUSD (5th Sep) 1.1350p, bought for 0.0040 in ~1.56k.
SOFR OPTIONS: Latest Blocks, Sep'25 Put Fly Update
Jul-29 14:10
- 10,000 SFRF6 93.37/96.50/96.62/96.81 call condors 1.0 ref 96.305
- Block, 5,000 SFRU5 95.68/95.75 2x1 put spds, 1.25 ref 95.845
- -45,000 SFRU5 95.37.95.62.95.87 put flys, 8.75 vs. 95.83/0.46%
