USD/CNH: Offshore yuan eyes gains as China’s Industrial Profits surge

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  • China’s offshore yuan consolidates on Tuesday’s 0.24% gain. 
  • China’s Industrial Profits registered a double-digit rise in December. 
  • USD/CNH’s daily chart suggests scope for a continued rise in yuan.

China’s offshore yuan (CNH) looks north on the back of upbeat economic data and a favorable technical setup. 

China’s Industrial Profits rose 20.1% year-on-year in December to 707.11 billion yuan ($109.40 billion) following November’s 15.55 gain, marking an eighth consecutive monthly rise in a row, according to data from the National Bureau of Statistics. Also, China’s benchmark overnight repo rate jumps to an over 21-month high in a CNH-positive manner. 

The positive fundamental factors gel well with the bullish CNH picture painted by USD/CNH’s bear flag breakdown confirmed on Tuesday. The pattern suggests a continuation of an eight-month downtrend and has exposed support of 6.4119 – the level observed on Jan. 5.

The offshore yuan is currently trading largely unchanged on the day near 6.4718 per US dollar. The Chinese currency rose by 0.24% to 6.4707 on Tuesday. 

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