MNI China Daily Summary: Wednesday, December 11

MNI BRIEF: Chinese Rail Passenger Numbers Break Record

MNI: PBOC Net Injects CNY37.3 Bln via OMO Wednesday

MNI: PBOC Sets Yuan Parity Lower At 7.1843 Weds; -1.22% Y/Y

MNI BRIEF: Brazil Not Even Close To Fiscal Dominance - David

CORRECTED-MNI BRIEF: Brazil Inflation Rises To 4.87% In Nov

EZ/UK Bond Supply Calendar: 4.25% Jul-34 Gilt Due Wednesday

EZ/UK T-Bill Calendar: 12-Month BOT Auction on Wednesday

MNI: JAPAN NOV CORP GOODS PRICE INDEX +3.7% Y/Y; OCT REV +3.6%

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

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FOREX: USDJPY Reverts Lower with US Yields as CPI Awaited

FOREX
  • Another day, another volatile session for the Japanese yen. Continuing to be steered by core fixed income markets, a treasury led rally on Friday boosted the Japanese yen substantially. USDJPY fell roughly 150 pips from session highs, falling as low as 142.20 as US two-year yields dipped below 3.6%. Price action sees the gap narrow to the key support area around 141.70, an area of critical focus heading into tomorrow’s US data.
  • In similar vein across the low yielders/funders, the Swiss Franc has been on the front foot, with EURCHF currently down 0.45% as we approach the APAC crossover. The cross looks set to close at the lowest level since Aug 06 and takes us closer to the year’s lowest levels, where some market analysts believed the SNB may have stepped in to curb excessive CHF strength.
  • The very front-end of the USD vol curve is unsurprisingly bid headed into tomorrow's US inflation print, with overnight EUR/USD implied cresting at 9.5 points this morning. That's still comfortably north of the running August average (6.1 points), but not far off half the prevailing levels ahead of Friday's NFP print.
  • This gels well with the view that the Fed are leaning more heavily on the employment aspect of the dual mandate - likely making markets less sensitive to tomorrow's inflation print relative to Friday's labour market report.
  • Today's pick up in vols pushes the break-even on an overnight straddle to ~40 pips, meaning a hawkish CPI print tomorrow would press the pair toward the key area of support identified on the 15min candle charts at 1.0970-77. Below here, Fibonacci retracement support resides at 1.0878.
  • All the focus Wednesday on US inflation data and note that the releases will land firmly within the Fed’s blackout period ahead of the Sep 17-18 meeting.
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