- China PMI data derail the Chinese Yuan’s (CNH) recovery based on the US-China trade truce.
- Trade developments, US PMI are on the spotlight for now.
Bears fail to compress the USD/CNH pair after Chinese PMI data as the pair recovers earlier losses while taking the rounds to 6.8388 during early Monday.
The offshore Yuan (CNH) hit the strongest level against the US Dollar (USD) while flashing a gap-down open at the beginning of the week’s trading in Asia.
However, mixed headlines from Chinese press concerning the US-China trade truce and sluggish print of the Caixin Manufacturing Purchasing Managers’ Index (PMI) triggered the pair’s up-moves then after.
China’s Caixin Manufacturing PMI for June slumped to a five-month low of 49.4 versus 50.00 forecasts. It should also be noted that a reading beneath 50.00 indicates a contraction in the activity which has been registered twice so far during the year 2019.
While sluggish fundamentals from China keep weighing on the benefits expected by the dragon nation’s latest trade ceasefire with the US, investors may wait for further developments in order to ascertain the pair’s near-term advances.
Among the key catalysts to watch, political plays surrounding the recently agreed trade peace can take the major role whereas the US Manufacturing PMI data from Markit and ISM could also offer additional direction.
The US Markit Manufacturing PMI isn’t expected to deviate from 50.1 prior readouts but its counterpart from the ISM might drop to 51.0 from 52.1.
Technical Analysis
A daily close under June month low near 6.8367 can drag the pair to 200-day exponential moving average (200-D EMA) level of 6.8016 whereas 6.8000 and April 25 high of 6.7600 may please sellers afterward. In a case of the quote’s advances, May 10 high surrounding 6.8650 and June 26 high close to 6.8918 should be given proper attention.
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