- The dollar is drawing bids amid a renewed risk-off tone.
- PBOC is expected to cut the interest rate to support the economy.
- USD/CNH os trapped in a falling channel on the daily chart.
USD/CNH is chipping away at the 4-hour chart 100-candle average at 7.0825 at press time with the Amerian dollar drawing bids amid losses in the US stock futures.
The S&P 500 futures are down 0.60% and the dollar index, which measures the value of the greenback against majors, is up 0.20%.
The US death toll due to the coronavirus (COVID-19) crossed 40,000 with over 744,000 infections, raising doubts over America’s readiness to “open up” the economy and weakening the risk tone in the markets. Additionally, the UK Prime Minister Johnson’s cautious approach in restarting the economic
activity and the mass shooting incident in Canada could be adding to the bearish tone around the
equities.
Focus on PBOC
Recently released China economic data showed a bigger-than-expected gross domestic product contraction in the first quarter.
As a result, the People’s Bank of China, on Monday, is expected to cut the one-year loan prime rate to 3.85% from the current 4.05%. On similar lines, the central bank is also expected to trim the five-yar rate to 4.65% from 4.75%.
A rate cut could strengthen the offered tone around the offshore Yuan (CNH), possibly yielding a falling channel breakout in USD/CNH. The pair is currently trapped in a bearish channel, as represented by trendlines connecting March 19 and April 2 highs and March 20 and April 10 lows.
The rate decision is due at 01:30 GMT.
Technical levels
Share
