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  • USD/CNH is flashing red for the first time in three days. 
  • China’s GDP is forecasted to have contracted in January to March for the first time since 1976.

The offshore Yuan or CNH is drawing bids this Friday morning in Asia and pushing the USD/CNH pair lower for the first time in three days. 

The currency pair is trading at 7.0746 at press time, representing a  0.18% decline on the day, having jumped by 0.34% and 0.17% on Wednesday and Thursday, respectively. 

Focus on China data

China will release its first-quarter gross domestic product (GDP) data at 02:00 GMT. The world’s second-largest economy is forecasted to have contracted by 6.5%, following the 6% expansion in the fourth quarter of 2019. 

Some analysts are predicting a deep contraction of 16 percent, according to the South China Morning Post. GDP is a lagging indicator and seldom yields big moves in markets. This time, however, it will tell us the extent of the damage caused by the coronavirus outbreak in China and influence expectations for economic contraction in other major countries like the US and some European nations, which have been severely hit by the crisis. 

A big beat on expectations could strengthen the bid tone around the CNH and other risk currencies, while a bigger-than-expected contraction will likely trigger a flight to safety. however, the downside in CNH could still be muted, given China now looks to have controlled the outbreak. 

Apart from the GDP data, markets would also take cues from the Industrial Production and Retail Sales number for March. 

Technical levels