MNI China Daily Summary: Friday, April 26

MNI BRIEF: China, US Should Strengthen Dialogue, Cooperation

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MNI: PBOC Conducts CNY2 Bln Via OMO Fri; Liquidity Unchanged

CHINA PBOC INJECTS CNY2 BILLION VIA 7-DAY REVERSE REPOS FRI

MNI: PBOC Sets Yuan Parity Lower At 7.1056 Fri; -4.56% Y/Y

MNI: BAKER HUGHES US RIG COUNT 613; OIL RIGS 506; GAS RIGS 105

MNI: UNIV OF MICHIGAN CONSUMER SENTIMENT FINAL APR INDEX 77.2

EZ/UK T-Bill Calendar: Germany, France Auction on Monday

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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USD Index Consolidates Strength Despite Yield Pullback

FOREX
  • Firmer US growth data and struggling equity indices have underpinned further greenback strength on Thursday. With currency volatility low throughout the US session, the USD index stands just 0.10% in the green ahead of the APAC crossover. The consolidation of USD strength is notable given the pullback for US yields that have shifted between 8-12bps lower across the curve.
  • The morning session was highlighted by some significant moves for the Japanese yen, especially after the period of stagnant price action in recent weeks. With the post-5y auction weakness in Treasury futures persisting into Thursday morning and the resulting widening of the US/JN yield differential, USDJPY pushed to a new recovery high of 150.78. Shortly following the print, a sharp spike in volumes saw the rate correct lower, prompting a ~75 pip slide to new lows before stabilising. Price action raised focus on the October 31st BoJ reserves release, at which markets will gain official confirmation of any market intervention.
  • Very little reaction for the single currency following the ECB hold, with EURUSD grinding to session lows around 1.0530 amid the additional stronger US GDP data.
  • Price has risen 30 pips from those lows but overall, this week’s sell off reinforces a bearish theme for the pair. Note too that Tuesday’s price pattern is a bearish engulfing candle - a reversal signal. A continuation lower would signal scope for 1.0496, the Oct 13 low. The key support and bear trigger lies at 1.0448, Oct 3 low.
  • The minor weakness in the Euro has been offset by a firmer AUD and NZD, both rising around 0.35% and eating into yesterday’s steep move lower.
  • On Friday, US Core PCE deflator data will cross as well as personal income data. The week’s calendar will finish with the revisions to UMich sentiment data and inflation expectations.
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