CNH: USD/CNY Pushes Higher Again, But Fixing Error Tighter

• CHINA SETS YUAN CENTRAL PARITY AT 6.8096 WEDS VS 6.8108

The AOFM sells A$300mn of the 4.75% 21 June 2054 Treasury Bond, #TB169:

• Average Yield (%): 5.3040 (prev. 5.4979)
• High Yield (%): 5.3075 (prev. 5.5025)
• Bid/Cover: 2.4633x (prev. 4.0800x)
• Allotted at Highest Accepted Yld as % of Bid at that Yld (%): 15.3 (prev. 27.3)
• Bidders: 42 (prev. 48), successful 19 (prev. 20), allocated in full 13 (prev. 11)

The BBDXY range overnight was 1204.03-1207.23, Asia is currently trading around 1204, -0.05%. The break higher in the USD looks to have lost all upward momentum, the MOU has seen it top out and test the 1205 breakout area. The market is much more comfortable selling US dollars, though its inability to follow through and extend lower has been interesting. Is it the market just playing it cautious and waiting for confirmation of traffic back through the Straits or something more ? I suspect the former. On the day, with the upward momentum lost I suspect the dollar headwinds should keep it trading heavy in the short-term. There are potential stumbling blocks though, Israel being chief among them but for now at least the market will be looking for a positive outcome. The first support is around 1203-1205 and then the 1197-1200 area, the Dollar needs to hold above here if it has any chance of moving higher again. A sustained break back below 1195-197 and the market will again start to turn its focus toward the year's lows between 1175-1185.                             

• Danny Citrinowicz on X: “Iran sees a direct link between what happens in Lebanon and regional stability as a whole, and even reserves for itself an opening to renew the confrontation if it believes the campaign against Hezbollah continues.”
• “The question is not only what they think in Beirut or Tehran, but also how much patience(for Israel) remains in the White House for a situation in which the Lebanese arena threatens to thwart a broader strategic goal from Trump's perspective – a deal with Iran and avoiding further deterioration in the Middle East.”
• "IRAN'S TOP NEGOTIATOR QALIBAF IN CALL WITH LEBANON'S PARLIAMENT SPEAKER: ISRAEL MUST WITHDRAW FROM 'THE OCCUPIED AREAS' IN LEBANON, PEOPLE OF SOUTHERN LEBANON MUST RETURN TO THEIR HOMES. THE WAR MUST END ON ALL FRONTS, INCLUDING LEBANON" - BBG
• The BBDXY Average True Range for the last 10 Trading days: 3.75 Points

Fig 1: BBDXY Daily Chart

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