- USD/CNH bounces off after a daily loss amid fresh doubts over China’s growth, the trade deal with the US.
- The US dollar (USD) extends broad recovery, recently gets support from the US-Middle East tension.
- US data, FOMC minutes and trade headlines are in the spotlight for now.
USD/CNH recovers to 6.9615 during the initial trading session on Friday. That said, the pair weakened on Thursday while taking advantage of the US-China phase-one optimism and expected positive results of the Chinese central bank actions. However, the upbeat catalysts concerning the dragon nation failed to last long, unlike the USD strength, which in turn triggers the pair’s recent pullback.
Expectations that China’s growth will have an uptick backed by the People’s Bank of China’s (PBOC) actions turned lower off-late after CNN said, “PBOC is just the latest central bank to join the rate-cutting frenzy. Like its peers in the US, Europe and Oceania, PBOC is sending a strong signal that it’s worried about the economy. In the meantime, China’s pace of expansion is expected to test new 30-year lows on a regular basis.”
On the trade front, The Hill came out with a story that highlights unanswered issues in the US-China phase-one deal to be a tough barrier for talks during the phase-two. Among them, Chinese purchases of US farm goods, intellectual property violations and forced technology transfer by China, as well as subsidization of Chinese industries took the front-seat.
Also supporting the pair’s recovery is the intact recovery of the US dollar. The greenback recently benefits from the US-Middle East tension. The latest headlines concerning the issue suggest that the US took responsibility for the missile attack at Baghdad airport in which some of the key personalities from Iran have been understood as dead.
Markets will now look forward to the US ISM Manufacturing PMI and the FOMC minutes for fresh impulse while any trade news will also offer intermediate move.
Technical Analysis
The one-month-old descending trend line, at 6.9720, restricts the pair’s immediate upside, which in turn signals gradual declines to 6.9500 mark.
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