USD/CNH: Offered below 7.0000 on China’s strong NBS Manufacturing PMI

• USD/CNH defies the previous day’s upbeat performance while magnifying losses from 7.0016.
• China’s July month official PMIs print better than forecast readings.
• Risk aversion continues with the surge in virus numbers, the US dollar index refreshes 26.5-month low.

USD/CNH sellers attack 6.9900, down 0.15% on a day, during the early Friday. The dropped heavily after China’s official PMI data flashed welcome figures for July. In doing so, the sellers ignore rising fears of the coronavirus (COVID-19) and broad risk-off moves. The underlying reason could be traced from the US dollar’s broad weakness.

China’s NBS Manufacturing PMI surged past-50.7 forecast and 50.9 prior to 51.1 while Non-Manufacturing PMI rose beyond 51.2 but stayed a bit lower than 54.4 previous as flashing 54.2 level for July.

Read: China’s manufacturing PMI ticks higher to 51.1 in July

With the upbeat data from China standing in contrast to the sluggish US statistics, bears regain controls. On Thursday, the US second quarter (Q2) GDP dropped to -32.9% versus -34.1% expected and -5% prior. Also posing challenges to America is the recent surge in the pandemic numbers and a lack of agreement over the phase 4 of fiscal package.

While portraying the downbeat conditions at home, the US dollar index (DXY) slumped to the fresh lows since May 2018. The greenback gauge takes rounds to 92.65, down 0.31% intraday, before refreshing the multi-day bottom with 92.60 figures.

On the other hand, rising virus numbers from Texas and Xinjiang have been weighing on the market sentiment together with the uncertainty surrounding the phase 4 fiscal package from the US.

As a result, the US 10-year Treasury yields remain pressured near 0.536%, the lowest since March whereas stocks in Asia-Pacific, except for China, mark losses by the press time.

Moving on, traders should keep eyes on the virus updates and any clues suggesting the agreement on the US aid package for fresh impulse. Additionally, US Chicago Purchasing Managers’ Index and the Michigan Consumer Sentiment Index can also direct the market players.

Technical analysis

The monthly low around 6.9640 remains on the bears’ radars unless the quote rises past-7.0155 level comprising a falling trend line from June 04.