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     BEIJING (MNI) - EXCLUSIVE: China is set to send a delegation to Washington
next week to sign a phase one trade deal with the U.S., a source close to the
Ministry of Commerce told MNI, adding that China's decision not to increase
grain import quotas would not prevent it from meeting commitments to buy more
American farm goods. 
     TOP NEWS: Vice Premier Liu He, China's lead negotiator in trade talks with
the U.S., will visit Washington Jan 13-15 to sign the 'phase one' deal, Ministry
of Commerce (MOFCOM) spokesman Gao Feng said Thursday. China will "to the extent
necessary" use its grain import quotas of wheat, corn and rice under its WTO
obligation, in accordance with market conditions, said Gao, when asked if China
will reduce imports from other countries or raise quotas to meet U.S. demand to
boost agricultural purchases. "This doesn't contradict with expanding imports of
U.S. agricultural goods," said Gao. 
     DATA: Inflation in China stayed flat at 4.5% y/y in Dec 2019 given slower
pork price gains, lower than 4.7% expected by most economists. PPI significantly
recovered to -0.5% y/y from -1.4% in Nov, given improved prices on iron and
steel, non-ferrous metal, chemical and fuel products. The figure was close to
the forecast of -0.4%. CPI for 2019 was 2.9% y/y, below the government-imposed
3% ceiling, the highest since 2011. PPI was -0.3% y/y, compared with 3.5% in
2018.
     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for the 12th day, leaving liquidity unchanged, according to Wind Information.
Total liquidity in the banking system is relatively high, PBOC said.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) rose to 2.2544% from Wednesday's close of 2.1147%, data by
Wind Information showed. The overnight repo average increased to 1.6771% from
Wednesday's 1.5414%.
     YUAN: The currency strengthened to 6.9311 against the dollar from
Wednesday's 6.9420 close. PBOC set the dollar-yuan central parity rate higher at
6.9497 from Wednesday's 6.9450.
     BONDS: The yield on 10-year China Government Bonds was last at 3.1425%,
down from Wednesday's close of 3.1600%, according to Wind Information.
     STOCKS: The Shanghai Composite Index gained 0.91% to 3,094.88. Technology
shares including software and block chain advanced. Hong Kong's Hang Seng Index
rallied 1.68% to 28,561.00.
     FROM THE PRESS: PBOC may lower interest rates for OMOs, MLF and the LPR by
15-30 bps this year, the Financial News reported citing Zhang Ming, Chief
Economist with Ping'an Securities. The deficit ratio target is estimated to
increase to 3% from 2.8% in 2019, said Zhang. The issuance of new
special-purpose local government bonds may be over CNY3 trillion in 2020, the
newspaper cited Zhang as saying.
     China will make more cuts to the so-called "negative list" of areas
restricted from foreign investment, the People's Daily reported citing MOFCOM
Vice Minister Wang Shouwen. China will also give greater autonomy to free trade
pilot zones, the daily cited Wang as saying.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]